Cryptocurrencies are no longer just speculative tools for a handful of enthusiasts. They’re becoming an established part of both personal and corporate wealth — and now, they’re beginning to influence one of the most traditional areas of finance: mortgages.

At BITmarkets, data analyst Ali Daylami tracks how the connection between crypto and housing finance is gradually evolving — from the first loans backed by cryptocurrencies in the United States to new regulatory approaches in Europe and Asia. In this interview, he explains what’s driving this shift, how banks are dealing with the volatility of digital assets, and why their integration into mainstream banking may be closer than most people think.

Just a few years ago, banks considered cryptocurrency trading a high-risk activity, often comparable to gambling. Today, however, new products are emerging that actually use cryptocurrencies as an advantage when applying for a mortgage. Why has the relationship between crypto and mortgages become such a hot topic in recent years?

Because cryptocurrencies have evolved from speculative assets into a regular part of both personal and institutional wealth. In 2025, nearly one in four adults worldwide owns some form of cryptocurrency — that’s more than half a billion people.

Moreover, the transaction volume of stablecoins, which already reaches trillions of dollars annually, shows that digital assets are being used for real economic activity, not just for trading. Naturally, that raises the question: if people hold real wealth in crypto, why shouldn’t it be part of their financial profile when applying for a mortgage? This shift reflects the recognition of where real value lies today — and the need for the financial system to start acknowledging that reality.

This transition happened surprisingly fast — within a few years, banks went from cautious or dismissive to actively exploring crypto-backed mortgages. What caused this change in attitude?

It came down to maturity, necessity, and trust. The crypto ecosystem has matured — there are more professional players, institutional infrastructure has emerged, and regulations are becoming clearer. At the same time, the financial world had to acknowledge that digital assets are here to stay, as they’re used daily by millions of investors and companies.

Transparency also played a major role. What used to deter banks — the openness of blockchain — has become one of its strengths. It allows lenders to reliably verify the ownership and value of assets. The change wasn’t sudden, but rather the logical result of the convergence of technology, regulation, and market behavior.

In your analyses, you mention that the most progress is seen in the United States. Fintech companies such as Milo or Ledn already offer bitcoin-backed mortgages, and large banks like Goldman Sachs and JPMorgan are also getting involved. Why is the U.S. leading the way?

Because the American financial system thrives on competition and innovation. It has both regulatory flexibility and a developed fintech ecosystem that allows for rapid testing of new models. The U.S. also has one of the highest concentrations of crypto holders in the world — tens of millions of active users and a major share of institutional crypto investments.

A large portion of global crypto wealth is in the hands of U.S. investors, which makes sense for banks exploring new types of loans that account for these assets. The American market has the unique ability to turn early experiments into scalable standards — and that’s exactly what’s happening here.

How does a “crypto mortgage” work in practice? What exactly is used as collateral, and how do lenders handle these assets?

Simply put, the borrower pledges their cryptocurrencies, such as bitcoin or ether, as collateral. These assets are securely stored — often through a regulated custodian — while the actual loan is provided in fiat currency.

If the market value of the crypto drops, the borrower must replenish the collateral, otherwise they risk partial liquidation. It’s a well-known principle from margin lending, simply applied to digital assets. This model allows people to leverage their crypto wealth without selling it, letting them maintain ownership and potential future gains.

Legislation also plays a key role. In the U.S., a bill introduced this summer would require mortgage appraisers to take crypto assets into account when assessing a borrower’s creditworthiness. How significant is this step, and what impact could it have on the mortgage market?

It’s a groundbreaking step. For the first time, federally backed institutions are being asked to treat cryptocurrencies held on regulated exchanges as part of a borrower’s financial assets. Digital wealth is thus entering the same framework as stocks or savings.

The impact could be substantial — it gives banks a standardized way to account for crypto holdings while sending a clear signal to the global market that digital assets can coexist with traditional credit models. Ultimately, it creates a regulatory precedent that other markets can build upon.

One of the biggest challenges, of course, is volatility. The value of crypto assets can change rapidly, posing a specific risk for lenders. How is this volatility managed in practice?

The most common method is over-collateralization — the borrower must pledge more crypto than the loan value to cover possible market swings. The typical loan-to-value ratio ranges from 50 to 65%, depending on the asset and the lender.

At the same time, continuous monitoring and automated risk thresholds are used to adjust collateral in real time if the price drops sharply. Some lenders also hold part of the collateral in stablecoins, which serve as a stabilizing buffer. These risk management techniques have already proven effective in other areas of crypto finance and translate well into mortgage products.

Beyond the U.S., you mention countries like Singapore, Japan, and Switzerland, which are also open to using crypto in housing finance. Do these markets share any traits that could inspire others?

Yes, they share more of a mindset than a specific model. These markets treat digital assets as a natural extension of financial innovation rather than an exception. Their focus is on clear rules, investor protection, and responsible experimentation.

As a result, they’ve achieved a healthy balance between openness and oversight. The combination of clarity, trust, and curiosity creates an environment where banks can explore new forms of collateral without compromising regulatory stability. Other regions could take inspiration from this — being open to innovation, but building on solid foundations.

In Europe, most banks remain conservative, and crypto has yet to make a major impact on the mortgage sector. Do you think that will change soon, or will Europe lag behind the U.S. for a while?

Gradually, yes. Europe typically moves forward once a clear legal framework is in place — and that’s happening now with the implementation of MiCA. It provides the foundation for the responsible adoption of crypto.

As MiCA enters its second phase in 2025, with full enforcement expected in 2026, we can realistically expect pilot projects within the next two to three years. Once European institutions see that crypto-backed mortgage models are working safely abroad, their willingness to experiment will grow. Europe will thus gradually approach the point where cryptocurrencies are seen as a legitimate part of the overall financial picture rather than something to be excluded.

If I were an average crypto holder in Europe and wanted to apply for a mortgage, how far are we from the point where I could use my crypto assets as collateral?

We’re fairly close. Once regulation and valuation standards stabilize under MiCA, pilot projects could appear within two to three years. The technology and demand already exist — now it’s mainly about trust and regulatory alignment.

The integration of crypto into personal finance is happening step by step: it started with investment products, followed by payments, and the next natural step is lending. Mortgages are simply the next phase of that evolution.

What changes do you expect in the field of crypto-backed mortgages in the coming years? Could this niche innovation become a standard part of the mortgage market?

We’ll likely see mortgages become more flexible and data-driven — recognizing various forms of wealth, from savings and tokenized assets to cryptocurrencies.

The rapidly growing tokenization of real-world assets, which is already nearing the $50 billion mark, will further accelerate this process. Institutional trust is also increasing — companies and even governments now hold digital assets on their balance sheets, estimated collectively at several million bitcoins.

On the consumer side, most active crypto users plan to expand their holdings, and nearly half of those who don’t yet own any are considering entering the market. All of this points toward a financial future that’s broader, more open, and significantly more digital.