Crypto continues to benefit from higher adoption rates and although it doesn’t filter down to the price of Bitcoin (BTC) immediately, it bodes well for the long term.
I am even surprised myself with how Bitcoin has transformed from a speculative asset into something more sustainable.
There have been several events that have also hastened the adoption of crypto and one of the transformational events was the advent of Bitcoin ETFs that are accessible for the average investor.
This was never the case before as people were highly confused about how to participate.
The next monumental shift on the verge of sweeping up another avalanche of new capital is the integration of crypto into the American property market.
Most Americans’ net wealth is tied to their home and, United Wholesale Mortgage – the second-largest US mortgage lender – announced a move to crypto payments last August.
However, despite widespread popular sentiment for the initiative from potential customers, the company gave up on the idea shortly afterward.
The regulatory uncertainty alongside market volatility was cited as the two main headwinds.
Nonetheless, the trend is moving in favor again as the first bitcoin mortgage offering was announced on Tuesday: confirming that while the regulators lack drafting a framework.
A real estate fintech company Milo announced the launch of the world’s first crypto mortgage: enabling borrowers to leverage their bitcoin holdings to buy real estate in the United States.
CEO of Milo Josip Rupera said that customers could obtain bitcoin-backed loans by using their bitcoin holdings as collateral for purchasing a property.
Customarily, first, customers needed to sell their crypto balance for a down payment by converting it into fiat currency.
However, Milo now allows US citizens and foreigners to qualify for a US-based mortgage based on their BTC holdings.
This is another indicator of BTC being massively valued as a form of alternative payment.
Milo offers crypto loans and has promised to expand their debt offerings to BTC holders.
Milo’s clients will be able to pledge their bitcoin to purchase property and finally qualify for a low-interest rate 30-year crypto mortgage.”
The company clarified earlier that ‘no dollar down payments’ would be required to finance the mortgage: making the procedure faster and more efficient. However, an obvious question pops up again: what about the sharp movements in the price of bitcoin acting as collateral?
Similar to other crypto loans, the crypto-mortgage would be launched with a margin-call component.
Milo would then underwrite the customer, evaluate the property, validate other aspects of creditworthiness, and ultimately facilitate a successful transaction.
If, however, the crypto drops in value, the borrower would be subject to the deficit amount if the assets are underwater.
Milo would allow the borrower to pay in fiat currency or pledge more crypto to adjust the margin account to its minimum maintenance margin.
Attaching itself to the coattails of the most stable asset in America could act as the panacea of crypto’s evils.
Expert bang on saying crypto is a poor store of value, well, if it's used to underpin an American house, then that argument goes out the window.
Making a path from Bitcoin to real estate debt is genius.
Milo has been planning this business since last year. The goal was to allow crypto holders to bypass the complex hassle with traditional banks and lenders, which barely consider crypto as an asset class. Instead, the company aimed to offer an alternative route to buy real estate.
Milo estimates that the crypto mortgage market could be worth tens of billions of dollars soon.
The marriage of mortgage lending and crypto would be the elixir to finally kill that volatility that many don’t like about this asset.
There’s nothing more stable about a physical home and the U.S. property market underpinning crypto is essentially the holy grail of the crypto industry into how this asset can really mainstream into every part of the U.S. economy.
Until then, accepting heightened volatility is part and parcel of crypto, and crypto settling in the $40,000 range shows that crazy fluctuations aren’t as common as they used to be.
To check out more about a crypto-backed mortgage or if you are thinking about taking out a crypto-backed mortgage, go to Milo’s homepage by clicking here.
