Peter Schiff Warns Bitcoin Collateral Plan May Increase Housing Market Risks

The product allows borrowers to use BTC as collateral without selling, avoiding triggering taxable events but still accessing mortgage financing.

Bitcoin critic Peter Schiff has warned that a new mortgage product backed by crypto collateral could expose lenders to higher default risks.

His comments came as Better and Coinbase launched a program that allows borrowers to pledge Bitcoin instead of selling it for a home deposit.

Bitcoin-Backed Mortgages Spark Debate

On March 26, Better and Coinbase announced a partnership to launch loans backed by digital tokens and tied to Fannie Mae standards. According to a press release, the product will allow borrowers to use their Bitcoin or USDC as collateral for a down payment without liquidating it or incurring taxes.

According to Better, which describes itself as the first AI-native platform for mortgages and home equity funds, the offering will target millions of Americans who own crypto but struggle to save money. The company also revealed that borrowers will not face margin calls if BTC falls, and the collateral will only be liquidated if payment delinquencies exceed 60 days.

However, in his typical style, Schiff pushed back, saying the product structure would shift the risk to lenders.

“Allowing home buyers to pledge Bitcoin as a loan payment is a bad idea, as it greatly increases the risk for lenders,” he wrote in X. “When Bitcoin crashes, the down payment disappears.”

The gold bug also added that lenders cannot sell collateral unless the borrower defaults, later calling the model “a scam to prevent people from selling their Bitcoin to buy houses.”

Flexibility and Acquisition Create a Broader Outlook

Better’s offer comes at a time when major cryptocurrencies are showing renewed volatility. It lost the $70,000 level yesterday, falling to $69,000 as it felt the effects of broader market weakness that also saw Ethereum dip below $2,100.

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At the time of writing, Bitcoin had gone below $69,000, lost about 2% in the last 24 hours and about 3% in 7 days. However, the 30-day chart was glowing green, with BTC up nearly 6% during that time, though the uptick did little to bring it closer to its October 2025 all-time high as it remains more than 45% below that level.

Some market observers have a different view of the current decline, with analysts such as Michaël van de Poppe noting that short-term holders were held, a situation often associated with long-term accumulation phases as weak hands leave the market.

The mortgage product is now sitting at the crossroads of these approaches, with companies like Coinbase arguing on the one hand that digital assets can be used without liquidation, therefore giving small investors who hold crypto access to housing, while on the other hand, critics like Schiff suggest that combining mortgage financing with such volatile assets will present the risks of handling traditional structures that were insignificant.