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In a sign of how quickly the space is evolving overseas, two companies, Better Home and Finance and Coinbase, have launched a product in the US that allows borrowers to pledge bitcoin or USDC as collateral to help fund a home deposit, while still taking out a standard conforming mortgage.
Backed by the Federal National Mortgage Association (Fannie Mae), the structure effectively splits the loan into two parts: a traditional mortgage and a second loan secured against crypto holdings.
It’s a model that hints at what the future of lending could look like, but one that remains largely incompatible with Australia’s current mortgage framework.
Nonetheless, while crypto currently sits outside the mainstream lending system, its popularity among Australians has surged.
According to the Independent Reserve Cryptocurrency Index, around 6.2 million Australians, or roughly 31 per cent of the adult population, now own or have owned cryptocurrency.
Young people are leading the trend, with 53 per cent of Australians aged 25–34 owning crypto, while Baby Boomer ownership has grown from 5.77 per cent to 8.2 per cent.
Surging demand, limited pathways
Despite that growth, facilities for using crypto to back mortgages remain limited.
“Crypto is still outside the mainstream Australian mortgage system,” Steph Coleman, operations manager and mortgage broker at Unconditional Finance, said.
“Most lenders do not accept it as security, and its primary use remains converted to cash and used as a deposit.”
It’s this distinction that prevents crypto from properly entering the mortgage space.
While overseas markets are experimenting with crypto-backed lending, where digital assets are directly pledged as collateral, Australian lenders are focused almost entirely on what happens after crypto is sold.
In practice, this means borrowers must liquidate their holdings into Australian dollars before those funds are considered, and even then, lender appetite remains cautious.
“Currently, lenders take a conservative and risk-based approach,” Coleman said.
“Crypto is excluded from serviceability, unrealised gains are ignored, and proceeds are only considered once liquidated.
“Regulatory uncertainty is the real barrier. AUSTRAC and ASIC guidelines mean lenders carry significant compliance risk if they can’t verify the origin of crypto wealth, so many simply avoid it altogether.
“Until there’s clearer regulatory guidance specific to digital assets in lending, most lenders will remain conservative.”
Risks and opportunities
Coleman noted that, should crypto become more widely adopted, it could create significant opportunity in the sector.
“The opportunity is real,” she said.
“There’s a growing generation of borrowers, particularly younger Australians, who hold meaningful wealth in crypto and want to enter the property market.
“Brokers who understand this space and know which lenders will work with crypto-sourced funds can genuinely differentiate themselves and serve an underserviced market.
“For borrowers, the opportunity is being able to leverage an asset class that was previously almost invisible to lenders.”
However, the key challenge remains volatility. Cryptocurrency values can swing sharply in short periods, undermining their reliability as loan security.
“A deposit that looks healthy one month can lose 30–40 per cent of its value the next, which creates real problems at settlement, hence the requirement to liquidate prior to application,” Coleman said.
Costa Arvanitopoulos, broker for Finni, added: “In the Australian context, it’s hard to see this becoming mainstream anytime soon.
“The risk profile is simply too high for traditional lenders, and until there’s greater stability and regulatory clarity around crypto, I can’t see major banks adopting it in the foreseeable future.”
The future?
Nonetheless, with the model still in its infancy and other countries experimenting with the sector, both brokers agreed that crypto-backed mortgages are something to watch.
“In the US, the space is more developed, with some lenders offering structures that allow for up to 100 per cent financing using crypto as collateral, which shows where the concept could head globally,” Arvanitopoulos said.
“Twelve months ago, the crypto conversation was almost non-existent with mainstream lenders,” Coleman added.
“I think the direction is clear: as crypto becomes more mainstream and regulatory frameworks mature, lenders will have no choice but to develop proper policies around it. We’re already seeing overseas markets, particularly in the US, move more quickly on this. Australia will eventually follow.”
Many Australians remain optimistic about the long-term future of digital assets, with the Independent Reserve reporting that two in five Australians believe that crypto will eventually be widely accepted for everyday use.
Coleman said the market is likely to evolve toward more standardised assessment frameworks for crypto assets, along with the emergence of specialist mortgage products designed for crypto-wealthy borrowers, supported by clearer regulatory direction from bodies, such as the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority.
“Brokers who get ahead of that curve now, building their knowledge and lender relationships in this space will be well placed,” Coleman said.
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