One of Australia’s big four banks is dipping its toes into uncharted waters – testing out cryptocurrency-backed home loans for wealthy clients.

As reported today by ‘Broker Daily’, the move comes through a partnership with Monochrome, which has developed the IBTC Bitcoin ETF. Normally, banks can’t lend directly against crypto because it’s an unregulated asset, but the ETF changes that game. It’s a listed, regulated product – more like listed company shares/stocks – so the bank can treat it as proper collateral.

Here’s how it works: the bank is offering loans against property worth $5 million or more, with loan-to-value ratios of up to 60%. Because the ETF is regulated, interest rates could look a lot more like what you’d see with a standard home loan, rather than the sky-high rates that usually come with crypto-backed lending.

For comparison, Block Earner recently launched crypto home loans too, but their rates start at 9.5% per year and can climb well above 11%. By contrast, this new pilot could bring those numbers back down to something much more competitive.

The catch? The bank hasn’t gone public with the details yet. They want to quietly run a few transactions first, working only with select high-net-worth borrowers before they make any big announcements.

Globally, crypto is edging further into mainstream finance. In the US, Freddie Mac and Fannie Mae – two of the biggest names in housing finance – have already been told by regulators to consider digital assets when assessing mortgage applications.

As reported in Broker Daily’s article, Monochrome’s chief product officer, John Eccles, reckons this is just the beginning:

“It’s not a matter of if, but when banks will sell Bitcoin, store Bitcoin, and lend against it. In the US, that’s already the direction things are heading,” he said.

The big picture? Traditional finance and crypto are on a collision course. With a major bank now testing the waters here in Australia, the idea of using your Bitcoin to back a luxury property purchase might soon move from the fringe into the mainstream.

It is certainly a change in tune by the majors on crypto, who have always shied away from it due to risk. This shows just how embedded crypto has become in Australia’s eco system. 

Good or bad idea? What do you think?