Is cryptocurrency-backed lending an advancement of the times or a useless gimmick?

Today, Coinbase announced that $BTC or USDC can be used as collateral for a home down payment loan, launching a so-called cryptocurrency housing mortgage lending in partnership with Better.

On the surface, this seems like a step for on-chain assets into the real world, but upon closer inspection, the terms are actually very underwhelming. Because if using Bitcoin as collateral, the initial collateral value must reach at least 250% of the down payment loan amount, meaning that $250,000 worth of BTC can only fetch $100,000 in cash.

If using USDC, the initial collateral ratio must also be 125%, meaning that $125,000 worth of USDC can only be exchanged for $100,000 in cash, essentially using more liquid assets to obtain less cash.

It’s important to know that BTC can easily obtain around 65% borrowing power whether on-chain or on centralized exchanges. Moreover, USDC can be directly exchanged for USD, why go through this hassle?? Not to mention these two assets can still generate staking rewards on-chain or at exchanges.

Additionally, this is not just a regular home loan; it is an extra layer of leveraged financing added on top of a traditional mortgage supported by crypto assets, essentially increasing financial leverage when buying a home.

Although the official statement emphasizes that price volatility will not trigger a margin call, and collaterals will only be liquidated after 60 days of default, the issue is that these BTC and USDC are not in the user's control before the loan is repaid; they enter a third-party custodial system, making it difficult to ensure 100% redemption. If issues arise, there is no mention of how compensation would be managed or at what level it would be compensated.

This product seems more like a repackaged gimmick of “not selling coins, not triggering tax events” dressed up as an innovation, but from the perspective of capital efficiency, asset control, and liability boundaries in extreme cases, it is not particularly attractive.

In plain language, it resembles a product designed to tell a story rather than a truly user-friendly financing tool for ordinary users.

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