March 26 (Reuters) - Coinbase is teaming up

with Better Home & Finance ( BETR ) to let homebuyers pledge

their crypto holdings as collateral for down payments, marking

one of the most ambitious attempts yet to adapt digital assets

for mainstream needs.

A prospective homeowner will be able to secure a loan

against the bitcoin or USDC in their Coinbase account to cover

the down payment, the companies said on Thursday. The loan will

be separate from the Fannie Mae-backed mortgage on the home.

The move will free homebuyers from having to sell their

crypto to fund their downpayments, which is typically done via

cash and cash equivalents.

Customers could hold on to their assets for longer,

potentially benefiting from further price gains and deferring

tax liabilities.

It could also temper longstanding criticism that crypto

assets have little practical utility.

"This product is designed to work within the safeguards of

the existing mortgage system, including how risk like asset

volatility is managed," Kara Calvert, head of U.S. policy at

Coinbase, told Reuters.

However, the approach adds complexity and leverage to an

already expensive purchase. In effect, buyers would be wagering

that preserving crypto exposure justifies taking on a second

loan alongside one of the biggest financial commitments of their

lives.

Access to homeownership has tightened in recent years as

elevated borrowing costs, high prices and constrained supply

have pushed the median age of first-time buyers to 40, versus 32

in 2000, data from the National Association of Realtors shows.

The mortgages will be originated and serviced by Better.

FROM FRINGE TO MAINSTREAM

The pro-crypto Trump administration has taken several steps

to ease regulatory hurdles that have long constrained its

expansion into traditional financial products.

Last year, the White House ordered regulators to expand

access to alternative investments, including crypto, in

retirement savers' 401(k) plans.

On the campaign trail for the 2024 presidential election,

Trump promised to make the U.S. the world's "crypto capital".

"We maintain an active, bipartisan dialogue with

Washington," Coinbase's Calvert said on crypto regulation,

adding the company's product will expand homeownership access

for Americans whose wealth does not sit in traditional accounts.

Coinbase said its crypto-backed mortgages function just like

a conventional home loan, with the same legal protections.

A company spokesperson said the mortgage terms and interest

rates will remain unaffected by bitcoin's price fluctuations

once the loan is active.

There will also be no margin calls even if the value of the

pledged crypto falls, as long as the owner keeps up with

payments, the spokesperson added.