Rating agency Weiss Ratings warned about the risks associated with crypto mortgages in the current economic situation in the U.S., urging caution with this type of product.

The report, authored by Weiss analyst Jon D. Markman, refers to Milo, a Miami-based digital banking firm that recently rolled out 30-year mortgages backed by Bitcoin (BTC), Ethereum (ETH), or stablecoins as collateral.

There are no down payments required, and the loan rates range from 3.95% to 5.95%.

“The product seems to be like a win-win, assuming real estate and crypto prices keep rising […] except there are signs both bets are unlikely to be winners in the near term,” wrote Markman, adding that the leading cryptocurrency is now off by 40% since it hit $66,000 in November 2021.


Among the reasons to be wary of crypto mortgages, Weiss cites the dismal performance of stocks and digital assets this year, a housing bubble in the U.S., and rising interest rates.

On top of that, the Federal Reserve’s governors are expected to raise short-term rates by 50 basis points, and those forthcoming policy changes are not something to ignore either, warns Markman.

“[The] U.S. property prices now face headwinds from a change in Fed policy and rising mortgage rates,” Markman added.

Scaling the business

Milo, which recently raised $17 million in Series A funding, has issued pre-approval letters on $340 million in new mortgages in the past 30 days, per a recent Bloomberg report. It’s unclear how many mortgages of that $340 million figure are crypto-backed.


One of the home loan products offered by Milo allows borrowers to pledge cryptocurrencies as collateral, with no down payments necessary. This means they can "spend" their crypto but avoid taxes on capital gains and theoretically continue to benefit from rising crypto prices. However, if the value of this crypto collateral drops, borrowers could face serious risk.

Josip Rupena, the founder of Milo, also said that he wants to scale the business by pooling these loans and selling them to banks, asset managers, and insurance companies.

“We’re going to refine this and get it bigger,” said Rupena. “Milo will be looking to provide other long-term solutions to those with crypto wealth—not just mortgages.”

Crypto-backed loans

Until recently, those who didn’t want to sell their crypto for cash had a few other options, including collateralized loans offered by BlockFi, Nexo, or Unchained Capital.

Ledn, a Canadian crypto lending firm, promised “the world’s first Bitcoin-backed mortgage offering” after raising $70 million last December.

Recently, uncollateralized mortgage loans are also available through the decentralized finance (DeFi) lending protocol Teller Finance, with the first borrower taking out a $500,000 loan in the USDC stablecoin.

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