Product is a company that aims to serve a growing population of bitcoin millionaires who don’t want to pay capital gains taxes when they sell their bitcoins to finance a conventional mortgage.
The company’s latest business line is expansion. It began as a crypto trading operation.
As institutional solutions grow for digital asset whales seeking alternatives to traditional finance, a cryptocurrency market-maker will fund its first bitcoin-backed loan.
XBTO intends to close a multi-million-dollar mortgage in Miami within the next few weeks using bitcoin as collateral. This is a first in a series of crypto-based lending booms.
Although the company started out as a proprietary trading firm, it will need to do know-your-customer checks. Credit scores and credit scores will also be required. However, investors clients have many advantages such as not having to sell bitcoin or incur capital gains.
Joe Haggenmiller (XBTO’s Miami-based Head of Markets) told Blockworks that the program would provide underwriting for those who might not otherwise be eligible, even foreign nationals.
Haggenmiller stated that “we’re solving an issue that people have”
Borrowers have the option to get financing up to 90% of their mortgage by paying 10% bitcoin downpayment for a 30-year or 15-year mortgage. Haggenmiller stated that rates will be comparable to traditional mortgages. He did not specify a range. It is possible to compare jumbo mortgage rates to determine the best rate, which are typically used for properties that are too costly for traditional loans.
This bet on bitcoin is bullish. If the cryptocurrency gains in value during a mortgage, which analysts believe is likely, the homeowner will be able to sell a portion of their position to make a larger loan payment. The bitcoin deposit, which will go through know-your-customer checks (KYC), will be custodied in an yet to be identified solution.
Haggenmiller stated that there is an old guard of bitcoin maxis who don’t want or need to sell bitcoin. This could be because it’s too expensive, or because they don’t want a tax hit. They may keep it in cold storage, and they don’t want it to go. They can use this method to buy a Miami condo they want with bitcoin.
Crypto lender Milo also offers digital asset-backed mortgages. This company claims to be an industry first.
XBTO will offer only Florida mortgages worth more than $1million as its initial offering. This is to reflect the company’s preference to concentrate on large loan opportunities and not spread its vetting resources thin by focusing on lower-value properties.
This area will likely grow over time and may include additional cryptocurrencies. Securitizing loans to access additional financing capital is another possible focus.
Columbus Capital, a traditional full service mortgage provider, is the firm’s partner to help with due diligence and underwriting lien holders.
Haggenmiller stated that the package looks just like a regular mortgage, not only in terms of product but also in terms of packaging. “We will get all the documents, just like a regular mortgage. The application process and servicing are the same as any other mortgage.
Haggenmiller stated that XBTO will need credit scores. However, he said that the company won’t ding those with poor financial records in terms of rates if they have enough bitcoin as collateral.
The company will look for red flags, such as past missed payments during its vetting process. Haggenmiller called this “thorough.”
Philippe Bekhazi, CEO of XTBO has other business lines, including venture capital investments and exchange market-making.
