Milo, a US-based cryptocurrency lending firm specializing in cryptocurrency-backed mortgages, has originated more than $100 million in home loans, including the company’s largest single transaction to date, a $12 million crypto mortgage.
The company, which holds mortgage provider licenses in ten U.S. states with more to follow, has a perfect track record of zero margin calls in its mortgage portfolio, despite periods of consistently choppy volatility for bitcoin and other cryptos, Milo said in a press release Wednesday.
The company allows crypto holders to pledge their bitcoin or ether as collateral for loans of up to $25 million without having to sell their digital assets, eliminating the need for cash down payments and avoiding costly taxable events.
Stepping back, Milo founder Josip Rupena said that people who were perhaps advised to buy Bitcoin 10 years ago by a friend, and who had the courage to hold on to it despite recurring cycles of volatility, might find that today, perhaps 95% of their net worth is in crypto.
These people are typically ages 30 to 55, have a job and maybe a retirement account, but they don’t have enough income to afford the home they would like to buy, Rupena said.
“Our typical transaction is a million and a half dollar house,” Rupena said in an interview. “A customer can make $100,000 a year and their crypto net worth can be between three and seven million. If you were to replace Bitcoin with Apple stock, a product like ours probably wouldn’t need to exist. But because the consumer has an asset that isn’t widely accepted, along with their concerns about volatility, that means products like ours need to exist to help them buy a home.”
Milo requires 100% of the property’s value as crypto collateral, which can be held with qualified custodians like 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 land acquisition, home improvement financing, and business investments.
Unlike traditional crypto loans which can feature margin calls with 25% drawdowns, Milo designed the product to be more conservative and accommodate drawdowns of 65%.
Even in turbulent times like recent months, if a drawdown situation crossed the necessary threshold, Milo would reduce the value of the loan, Rupena said, so the customer could continue to benefit from their mortgage.
“We would basically reduce the risk by 100% and bring it down to 65% or 70%, like a regular mortgage, and then they could continue to make payments. We designed it in such a way that as long as a person can continue to make payments, they can continue to have that house. They won’t lose their house, because Bitcoin is going down,” he said.
So far, Milo has completed several transactions in real estate hotspot Miami and more in other areas of Florida, as well as Texas, California, Colorado, Connecticut and Arizona. The $12 million transaction mentioned in the press 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 opens up real-world use cases for many bitcoiners,” Back said in a statement. “As bitcoin continues to appreciate, buyers are able to build equity in real estate and do not have to sell their long-term conviction, bitcoin.”
