Milo, an American cryptocurrency lending company that specializes in cryptocurrency-backed mortgages, has originated more than $100 million in mortgage loans, including the company’s largest transaction to date, a $12 million crypto mortgage.
The company, which holds mortgage provider licenses in ten US states and more to come, has a perfect track record of zero margin calls across its entire mortgage portfolio, despite enduring consistently choppy periods of volatility for bitcoin and other cryptocurrencies, Milo said in a press release Wednesday.
The company allows cryptocurrency holders to pledge their bitcoin or ether as collateral for loans in amounts up to $25 million without having to sell their digital assets, eliminating the need for cash down payments and avoiding costly taxable events.
Taking a step back, Milo founder Josip Rupena said that people who were perhaps advised by a friend to buy some Bitcoin 10 years ago, and had the courage to hold on to it through recurring cycles of volatility, may find that today perhaps 95% of their net worth is in cryptocurrency.
These people are typically between 30 and 55 years old, have a job and perhaps a retirement account, but don’t have enough income to buy the home they would like, Rupena said.
“Our typical transaction is a house for a million and a half dollars,” Rupena said in an interview. “A customer could make $100,000 a year and their crypto net worth could be between three and seven million. If Bitcoin were replaced with Apple stock, a product like ours probably wouldn’t need to exist. But because the consumer owns an asset that isn’t widely accepted, plus their concerns around volatility, it means that products like ours do need to exist to help them buy a home.”
Milo requests 100% of the value of the property in crypto collateral, which can be held with qualified custodians such as Coinbase or BitGo, or there is a self-custody option for those who want to maintain full control of their assets. The loans, which start at 8.25%, can also be used for things like purchasing land, financing home improvements and business investments.
Unlike typical crypto loans that can have margin calls with 25% drawdowns, Milo designed the product to be more conservative and accommodate drawdowns of 65%.
Even in turbulent times like the last few months, if a downsizing situation crossed the necessary threshold, Milo would reduce the value of the loan, Rupena said, so the customer could still have the mortgage.
“Basically, we would reduce the risk from 100% and reduce it to 65% or 70%, like a normal mortgage, and then they could continue to make payments. We designed it so that as long as a person can continue to make payments, they can continue to have this house. They are not going to lose their house, because Bitcoin goes down,” he said.
So far, Milo has completed several transactions in the real estate hotspot of Miami and more in other parts of Florida, as well as in Texas, California, Colorado, Connecticut and Arizona. The $12 million transaction mentioned in the news release took place in Tennessee, Rupena said.
The product received the blessing of bitcoin pioneer and Blockstream CEO Adam Back.
“Milo’s product is a game-changer in bitcoin lending and unlocks real-world use cases for many bitcoiners,” Back said in a statement. “Although bitcoin continues to appreciate, buyers can accumulate equity in real estate and do not have to sell their long-term conviction: bitcoin.”
