Can crypto get you a home loan? 🏠👨💻
Crypto collateral for home loans - risks v reward? Bitcoin millionaire Dr. John Forsyth found dead after going missing. Binance lost $1.8B in deposits in May. CFO accused of losing Firm $35M in crypto
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The traditional real estate game can be a bit of a snooze-fest with its sky-high transaction costs, never-ending processes, and that exclusive "members-only" vibe. But Cryptocurrencies and blockchain technology are strutting their stuff and bringing some serious disruption to the scene. How?
Home loans using crypto as collateral
Picture this: you're a crypto investor, bathing in the glow of your digital wealth, but when it comes to getting a home loan from a traditional bank, you hit a brick wall. It's like they don't speak your language! But there's a solution that promises to keep your Bitcoin intact while helping you realise your dreams of property investment. Enter the world of crypto home loans.
The advantages
Retain Your Digital Assets: With a crypto home loan, you can hold onto your valuable digital assets like Bitcoin instead of selling them off.
Avoid Capital Gains Tax: Selling your crypto to buy property can lead to a nasty capital gains tax bill. But with a crypto home loan, you can dance your way around that hurdle and avoid the tax man's grip.
Stick It to the Banks: Legacy banks can be a buzzkill when it comes to accepting digital assets as collateral. But fear not! Crypto home loans give you an alternative route, showing those banks who's boss.
Flexibility and Convenience: Traditional loans have their rules, but crypto home loans bring a touch of freedom. Enjoy flexible loan terms, repayment options, and eligibility criteria tailored to your crypto-loving lifestyle.
Cost Savings: Depending on your situation, a crypto home loan may come with lower interest rates than traditional mortgages.
🔍 Here's how it works
Instead of selling your Bitcoin for real money, you hand it over as collateral to a lender.
First, the lender assesses your crypto holdings to determine how much you can borrow. Your digital wealth takes centre stage here. Forget about credit history and pay-check stubs (although having those won't hurt).
Once the lender decides the terms—loan amount and annual interest rate—you need to pledge a portion of your crypto stash as collateral.
With the loan closed and the real estate purchased, it's time to start repaying the loan. Monthly instalments can be paid in selected cryptocurrencies or traditional fiat.
Borrow against his Bitcoin and use the rental income from investment properties to pay off the loan. Genius, right? Well, not exactly. Banks have little interest in wealthy Bitcoiners. They'd rather dance with the poor wage slaves. Although the interest rates on crypto-backed loans seems appealing, you are playing a dangerous game.
🤔 Let's weigh the risks
Traditional mortgages: 10%–20% cash down payment.
Crypto collateral loans: Start at 100% loan value, some even demand 200%!
You're going one-to-one with the loan, so be prepared to lock up your precious Bitcoin.
So, if you're eyeing a $800,000 loan, get ready to lock up at least $800,000 worth of Bitcoin.
✅ If you successfully pay off the loan, you get your Bitcoin back. Hooray!
🌪️ But the catch: If the value of your Bitcoin collateral takes a nosedive, it's liquidation time!
Now, if your Bitcoin collateral suddenly plummets in value while you're sipping cocktails on a tropical beach, oblivious to the crisis unfolding. You miss the margin call and don't have enough funds to cover it. And just like that, your Bitcoin vanishes into thin air.
If Bitcoin's price drops by more than 50% from the time they took the loan, they must scramble to provide additional collateral within a limited timeframe.
Now where to go?
Milo: Florida's crypto mortgage pioneer, offering up to $5 million loans for real estate investments with rates from 3.95% to 5.95%. They accept Bitcoin, Ether, and stablecoins. No down payment needed!
Ledn: Our Canadian friend making waves with Bitcoin-backed loans. They're expanding to offer Bitcoin mortgages in Canada and the U.S. this year.
USDC.Homes: Yeehaw! They're all about Texas real estate. Borrow up to $5 million with APRs from 5.5% to 7.5%. They accept Bitcoin, Ether, USDC, and more. Your down payment earns interest!
Figure: Get on their waitlist for crypto mortgages up to a whopping $20 million. They accept Bitcoin and Ether, offer 30-year fixed-rate loans, and even have monthly collateral adjustments.
You can transform a physical property into digital tokens, each representing a piece of the enchanted land. Smart contracts define the contract details and trigger events when specific conditions are met.
It's like crowdfunding, where the property is divided into small fragments, granting ownership to those who hold the tokens. This process brings greater accessibility and transparency to the real estate market and reduces time and cost in offering investors fractional ownership and secondary trading.
Read a little more into it here.
TTD Missing 😒
The missing 'Bitcoin Millionaire' and the co-creator of ONFO coin, Dr. John Forsyth, has been found dead.
Dr. John Forsyth was the founder of Onfo, which promised to offer decentralised crypto via network mining. In 2020 Forbes is called him a "Bitcoin millionaire." This guy was a math whiz who struck gold early on with crypto. He held on tight through multiple halvings
Dr. Forsyth, a crypto enthusiast and emergency room doctor, went missing after failing to show up for his shift at Mercy Hospital. This raised immediate red flags for his family because he never missed a shift.
Authorities eventually found Forsyth's car near the hospital, with all his belongings (Wallet, passport, laptop, work briefcase) inside.
Dr. Forsyth's body was discovered about an hour away from where he was last seen—he had suffered from an apparent gunshot wound. But the police insist there's no foul play involved.
TTD Numbers 🔢
$1.8 Billion
Worth of cryptocurrency assets withdrawn by customer from Binance. Equivalent of 3.3% of its total deposits. DefiLlama data.
Binance tryna find a balance
Binance, the world's top crypto exchange, is experiencing a significant outflow of user deposits amid regulatory pressure and the loss of banking and payment provider partners.
OKX, the next biggest exchange tracked by DeFiLlama with $9.9 Billion in assets, has enjoyed a 1.9% jump in deposits in the last four weeks.
The regulatory crackdown in the US, including a lawsuit filed against Binance by the Commodity Futures Trading Commission, has made banks cautious about dealing with crypto-related entities. Binance has also faced challenges in the UK and Australia, with banking partners discontinuing their services, further affecting user deposits. Additionally, Binance is grappling with legal issues, as it has been charged with failing to register as a derivatives dealer and turning a blind eye to money laundering on its platform.
TTD Blockquote 🔉
His Excellency Mr. Justin (Yuchen) SUN. Founder of @trondaoofficial, Supporter of @bittorrent | Advisor to @huobiglobalofficial
What can we say, eh?
“I think this is a very big step for crypto in China”
Justin Sun is thrilled about Hong Kong's decision to allow retail investors to trade digital assets.
Why won't he be, eh?
This move opens up new opportunities for Huobi and the broader crypto community. Huobi will begin onboarding Hong Kong residents for trading, which shows their confidence in the new regulations.
Hong Kong's decision to allow retail investors to trade digital assets is a significant development for the crypto industry, especially in China.
It's a positive step towards legitimising and regulating the sector. This move comes after Hong Kong's economy and fintech reputation were negatively affected by COVID-19 lockdowns and previous regulatory crackdowns.
The new law requires crypto companies to comply with registration and regulations enforced by the Securities and Futures Commission (SFC).
Even Chinese citizens can participate in trading if they have Hong Kong residency, which adds an intriguing dynamic. Overall, this is seen as a step towards reestablishing Hong Kong as a digital asset hub and diversifying its economic landscape.
TTD Surfer 🏄
To comply with regulatory requirements, Binance will stop trading services for a dozen privacy-centric cryptocurrencies, including Monero, Dash, and Zcash for its customers in France, Italy, Spain, and Poland.
A Seattle-based startup, Fabric, has accused its former CFO Nevin Shetty of losing $35 Million in crypto during the market crash of May 2022.
T-Mobile owner Deutsche Telekom MMS will provide staking and validation services for Polygon's proof-of-stake network, which serves as a Layer 2 scaling platform for Ethereum.
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Great read! What happens when your BTC collateral doubles or triples in value?
Also TTD Surfer, Monero is going to get the Streisand effect if they don't watch out.
collateral builds crypto as as assets with long-term value. that alone can lead to the long-term adoption