Australia’s housing crisis seems to have deepened of late owing to rapid interest rate hikes by the Reserve Bank of Australia and insufficient housing supply among other major reasons. In an attempt to forge a new, crypto-reliant way of accessing house loans, crypto firm Block Earner has debuted the first BTC-backed mortgage programme in Australia.
Founded in 2021, Block Earner explains itself as a crypto exchange that also provides crypto-backed loans. In an update posted on its website, the Sydney-headquartered firm said it will allow individuals borrow Australian dollars (AUD) using Bitcoin as collateral.
Those who opt-in to use this service from Block Earner’s would be able to access funds of upto 50 percent of their BTC collateral deposits. For now, the amount that can be borrowed has been capped at AUD 5 million. The company website claims that these BTC-backed loans could be unlocked within 24 hours of being approved.
Essentially, this will let people use BTC as security and mark a notable usecase for Bitcoin in Australia, where the crypto sector is still in the infancy stage compared to other regions like the US and the EU.
“Choose a Fixed Term loan for 3-5 years with a predictable repayments, or opt for a Line of Credit for up to 1 year, allowing you to repay on your own schedule. Line of Credit rate of 9.50 percent (11.93% comparison rate), Fixed Term rate of 11.50 percent (12.17 percent comparison rate),” Block Earner said on its official site.
This development for the company comes after it recently got a positive verdict in a two-year-long legal struggle to prove that its crypto lending products did not fall within the “financial products” bracket. In April, a federal court in Australia said because the company was not collecting people’s money to generate future benefits for time, its yield product does not classify as an investment or financial product.
In November 2022, the Australian Securities and Investments Commission (ASIC) had launched a civil legal challenge against Block Earner, asserting that the firm required to obtain an Australian Financial Services License to offer its crypto-related fixed-yield products.
With the evolving regulatory landscape around crypto, using these assets for loans could see more adoption internationally. Recently, for instance, bill (H.R.4374) has been introduced to the U.S. Congress aiming to have mortgage issuers consider crypto funds as a factor in evaluating the creditworthiness of loan applicants.