APX Lending, a Toronto-based cryptocurrency lending company, has announced its plans to introduce Bitcoin [BTC]-backed mortgages in Canada in the first quarter of 2027.
The proposed product would allow homebuyers to use their Bitcoin holdings as collateral to borrow money for purchasing property, instead of selling their cryptocurrency to raise cash.
Typically, people who own Bitcoin but want to buy a home were supposed to sell some of their holdings to fund the down payment or purchase. But now APX wants to offer an alternative that allows borrowers to retain ownership exposure to Bitcoin while accessing funds for real estate.
How is APX providing Bitcoin loans in Canada?
Here, the mortgage product would work by allowing borrowers to pledge Bitcoin to secure a loan. For instance, a $95,000 down payment loan would need $190,000 in Bitcoin collateral if a borrower wanted to buy a house worth $475,000.
Meanwhile, $475,000 in Bitcoin would be needed to cover the entire purchase price, with the property acting as collateral.
Explaining the purpose of this Bitcoin loan, APX CEO Andrei Polyakov noted,
People don’t borrow to reinvest in digital assets, but they borrow to invest in real estate, to open up new businesses to buy property, send their kids to college. I mean, these are all real examples from our users.
In fact, the company has also opened a waitlist for the same. However, the product’s interest rates, repayment periods, and borrowing conditions have not been announced yet.
Remarking on this, Polyakov added,
So we don’t lend out that collateral, and we don’t reinvest it into risky ventures. And that allows us to protect our borrowers.
The push and pull of the APX Bitcoin loan
In all of this, one potential advantage is that borrowers would not have to sell Bitcoin and potentially miss out on future price appreciation.
In fact, borrowers can retain their Bitcoin and benefit from potential price gains while purchasing property. However, a sharp BTC price decline could reduce collateral value. This in turn would force them to add funds or sell Bitcoin to meet lending requirements.
As of now, the company stores customers’ cryptocurrency through BitGo and does not lend out the pledged assets. Nevertheless, its upcoming mortgage product will have separate rules governing collateral shortfalls, liquidations, and defaults.
This comes at the backdrop of Canada’s residential mortgage debt reaching $1.75 trillion in June. Meanwhile, Bitcoin was trading at $79,967.38 at press time after a drop of 1% in the past 24 hours.
Crypto lending market analysis
As of now, the United States has a similar product named Milo, which has reported originating more than $100 million in cryptocurrency-backed mortgages.
At the same time, Sygnum Bank and Debifi also launched MultiSYG on 23rd October. This one too is a Bitcoin loan service. It uses segregated multisignature wallets to distribute control of borrowers’ collateral among the client, the bank, and independent institutional keyholders.
All of this followed a recent report by AMBCrypto, which showed how crypto lending has contracted in Q2, with total crypto-collateralized loans falling 16.78% to $56.16 billion.
Final Summary
- Though APX has opened a waitlist, the product’s interest rates, repayment periods, and borrowing conditions are yet to be decided.
- APX is gearing up to enter a market where Canada’s residential mortgage debt reached $1.75 trillion in June.