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Peter Schiff Sounds Alarm On Bitcoin-Backed Mortgages

BY Benzinga | AGENCY | 03/27/26 02:04 PM EDT

Economist Peter Schiff is sounding the alarm over a new housing finance initiative. The plan allows borrowers to use digital assets for home purchases. Schiff argues the move creates a “free ride” for crypto holders at the expense of the public.

The Crypto-Collateral Structure

Fannie Mae (OTC:FNMA) is entering the crypto-backed mortgage space through a strategic partnership. Better Home & Finance Holding Co. (BETR) and Coinbase Global Inc. (COIN) lead the rollout.

Under the program, borrowers obtain a conventional mortgage for the property. A separate second loan is secured by Bitcoin (CRYPTO: BTC) or USDC custodied with Coinbase. This structure lets buyers avoid selling tokens and triggering capital gains taxes.

Schiff Critiques Downside Risk

Schiff took to X on Friday to criticize the government-sponsored enterprise (GSE) involvement.

“Fannie and Freddie guaranteeing mortgages with pledged Bitcoin as the only down payment means HODLers get a free ride. If Bitcoin keeps going up, they keep all the gains. If Bitcoin crashes, they walk away from their mortgages, sticking the GSEs and taxpayers with huge losses.”

The economist suggests the plan lacks protection for the entities backing the debt.

Market Conditions and Volatility

The initiative arrives as the 30-year fixed-rate mortgage hit a six-month high of 6.38%. Rising oil prices and Middle East conflict have stoked inflation fears. Freddie Mac (OTC:FMCC) reported these rates rose for four consecutive weeks.

The crypto-backed second liens use a 40% loan-to-value (LTV) ratio. This provides a cushion against digital-asset volatility. However, Schiff remains skeptical of the long-term stability for taxpayers.

Political and Systemic Pressure

The program follows calls from investors Bill Ackman and Michael Burry to end GSE conservatorship. They recently urged President Donald Trump to recapitalize Fannie and Freddie.

Meanwhile, Dave Ramsey warned that record personal debt is crushing young buyers. This crypto-collateral plan targets “asset rich, cash poor” households to bypass these hurdles.

Image via Shutterstock

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