Borrowing against your coins goes retail again — read the liquidation clause first

Two US companies opened crypto-backed borrowing to ordinary customers this week. Better Mortgage, working with Coinbase, made its Bitcoin-backed mortgage generally available, letting American homebuyers pledge BTC as collateral for a down payment instead of selling it. A day earlier, Galaxy opened a revolving credit line on its GalaxyOne platform that lets eligible US clients borrow cash against Bitcoin, Ethereum and Solana. The shared idea is old and simple: you keep the upside of the coins, someone else holds them, and you owe money on a schedule.

The mechanics run on overcollateralization, meaning you must pledge more than you borrow. Better requires borrowers to pledge BTC worth at least 250% of the down payment loan, and the pledged coins move to Better's custodial account on Coinbase Prime. That down payment loan sits beside a Fannie Mae-backed home loan, carrying the same interest rate and amortization term and repaid as a single monthly payment; the BTC comes back once the mortgage is fully repaid or refinanced, subject to the loan terms. Galaxy sets a 50% loan-to-value ratio at origination, so roughly $100,000 of collateral supports about $50,000 of borrowing, at a variable 8.99% APR with no origination fee.

The part worth reading twice is what makes the lender sell your collateral. Better says a falling Bitcoin price alone does not trigger a margin call or change the mortgage terms, but it can liquidate the pledged BTC if a borrower falls 60 days delinquent on payments. Galaxy says collateral values are monitored continuously and that clients are warned before any collateral action, and that pledged coins are not rehypothecated, meaning the firm does not lend them out or reuse them while they back your line. Staked SOL keeps earning rewards while pledged. Access is bounded: Galaxy's line is live in 40 states, excluding California, Delaware, Idaho, Indiana, Minnesota, Mississippi, Missouri, Nevada and South Dakota, and Better requires US residency, a verified Coinbase account and its normal credit and income underwriting.

This category has a history that both firms are implicitly answering. In 2022, Celsius, BlockFi and Voyager froze customer funds and forced liquidations when prices fell, and the damage spread across the market. The pitch now is a different structure, with the lending running on a regulated platform and pledged collateral staying put rather than being lent onward. That is the pitch. It is a design choice a company can describe, not a promise the market enforces.

For a beginner, two questions matter more than the advertised rate. First, what exactly triggers a sale of your collateral, price or missed payments or both, and how much warning do you get. Second, where do the coins physically sit while pledged, and what happens to them if the lender itself fails. Borrowing against coins converts a price drop you could have simply waited out into a payment schedule you cannot. This is information, not advice.