Crypto mortgages are becoming a hot topic in Canada, but the way they work remains confusing. The idea of using wealth for home ownership is attractive for Canadians who have a large holding in Bitcoin, Ethereum, or other digital assets.
But turning cryptocurrencies into viable down payments or utilizing them as collateral is not as simple as it sounds. Between tax impacts, lender suspicion and regulatory requirements, the road from digital wallets to mortgage approval requires careful planning and documentation.
Case Study: When cryptocurrency becomes a mortgage payment
1) Recently, Brian Hogben, a Mission 35 mortgage, worked with clients who have converted cryptocurrencies into Canadian dollars. These funds have been in bank accounts for 90 days and are usually sufficient to meet lender documentation standards.
The challenge is to find a lender who understands cryptocurrencies and more importantly an underwriter. Although funds passed through funds and Fiat, several major banks refused to continue. Progress has finally made progress through Bank of Montreal, which Brian explains, is a professional underwriting team familiar with crypto-related transactions.
BMO approved the mortgage after tracking the origins of the fund and confirming that they meet the anti-money laundering (AML) standards. This is a breakthrough, but also emphasizes how new and misunderstood cryptocurrencies stay in the mortgage space.
2) A few years ago we encountered the exact same thing, with clients buying a home in the Greater Toronto area. As banks withdrew their mortgage approval, they approached us just a week before the deadline. The reason is that the down payment mainly comes from digital wallets that contain cryptocurrency funds.
The only solution available is a private first mortgage, which we place in a vault mortgage. Despite the tight schedule, everything is good and buyers avoid losing $250,000 in deposit.
Interestingly, when they wanted to refinance within six months, they had the exact same problem. The bank still wants to verify the down payment of its original purchase.
What is a crypto mortgage and how does it work?
Crypto mortgages usually fall into one of two categories:
- Crypto-funded mortgage: You sell cryptocurrencies, convert them into Canadian dollars, and then use these funds as your down payment. This is more common, but has tax consequences.
- Crypto-back mortgage loans: You guarantee your cryptocurrency without selling cryptocurrency. This may help you avoid triggering capital gains taxes, but requires lenders who are able to assess and manage this risk.
How to work for crypto loans
If you want to get liquidity without selling cryptocurrencies, another option is a crypto-backed loan. Here is how it works:
1. Deposit crypto as collateral
You transfer the cryptocurrency to the platform and save it in a secure wallet or smart contract. Platforms such as YouHodler and Ledn support this model.
2. Loan Value (LTV) Ratio
You can usually borrow 30% to 70% of the value of the cryptocurrency. For example, a promised $10,000 worth of Bitcoin might give you a $5,000 loan.
3. expenditure
Loans are issued in Fiat (such as CAD, USD) or stablecoins. Most do not require a credit check and can be approved quickly.
4. Repayment and interest
The terms vary. Some platforms offer flexible repayment options; others require a fixed schedule. Once the loan and interest are paid back, your cryptocurrency will be returned.
5. Liquidation risk
If your cryptocurrency value drops and your LTV exceeds a certain threshold, you may need to add collateral. Otherwise, your cryptocurrency may be liquidated.
6. No taxable activities
Since you are borrowing and not selling, there are no capital gains tax events. From a tax planning perspective, this can be beneficial.
Simpler, safer alternative: Use crypto ETFs for staking planning
For a more direct path, consider using crypto ETFs instead of direct cryptocurrencies. ETFs allow you to gain access to digital assets without managing your wallet, keys, or exchanging accounts.
Crypto ETFs held in mainstream brokerage firms, including in TFSA and RRSP, are easier to understand and verify for lenders, avoiding friction from direct crypto assets.
Canada’s leading crypto ETF
These are some of the top crypto ETFs available to Canadian investors:
- BTCC (Target Bitcoin ETF): First Canadian Bitcoin ETF with CAD and USD options and a carbon neutral version
- BTCQ (3iq Coinshares Bitcoin ETF): Physically supported BTC, saved in refrigeration
- FBTC (Fidelity Advantage Bitcoin ETF): Designed specifically for registering an account
- ETHH and ETHX (Purpose and CI Galaxy Ethereum ETF): Provides direct ETH exposure, or does not exist
- ibit (ishares Bitcoin ETF): Managed by BlackRock, the world’s leading asset manager
Several ETFs now include additional exposure to new crypto assets such as AI stocks or Solana, expanding diversification options within the space.
Naturally, our readers should not consider this investment advice. Before continuing, ask your licensing financial advisor to provide advice.
Can I use cryptocurrency as a down payment?
Yes, but there are strict conditions:
- You must convert cryptocurrency to Canadian dollar
- Maintain paper strips for sales and deposits
- Ready to explain the origins of your AML compliance fund
Many lenders will still hesitate. Working with mortgage professionals familiar with these requirements and understanding the lender of cryptocurrencies is crucial.
Is Canada legal and safe?
Yes, but regulatory guidance is developing. Lenders must comply with OSFI and FINTRAC standards, which include thorough AML and basic verification.
OSFI is expected to implement new digital asset rules in 2025, which could impact how Canadian financial institutions deal with cryptocurrency products.
Key risks to consider
- Price fluctuations: Declining crypto value will lead to margin or liquidation
- Credit limits: Many banks still reject crypto-related funds
- Platform risks: Some crypto lenders went bankrupt
- No deposit insurance: Cryptocurrency not saved as collateral for CDIC
- Compliance Complexity: Documentation, tax reports and regulatory reviews may be important
Who provides crypto-backed loans?
The following platforms offer crypto-powered loan services:
- Ryder (Canada)
- APX Loan (Canada-centered)
- binance
- Common cases
- crypto.com
- YouHodler
- Salt Loan
- AAVE and Compounds (DEFI protocol)
For Canadians, I was told that Ledn and APX loans provide the most relevant regulatory consistency.
How does CRA handle cryptocurrencies in a staking scheme?
According to CRA guidelines, cryptocurrencies are considered as a commodity. Selling it to fund down payment is a taxable event and any capital gains must be reported.
However, borrowing your cryptocurrency is no Incline, do no Trigger capital gains tax, at least under the current rules. Anyway, detailed documentation is crucial.
Our advice
Crypto-backed mortgages and cryptocurrency loans offer new possibilities, but are not ideal for everyone. If you are a cryptocurrency holder of home ownership in Canada:
- Convert your cryptocurrency to Canadian dollar and let it season for at least 90 days
- Also, accumulate your crypto wealth in an exchange-traded fund
- Record all content: sales, transfers, deposits and sources of funds
- Work with professionals who understand traditional loans and cryptocurrencies
- Prepare to meet stringent compliance and verification requirements
Canada’s mortgage landscape is still catching up with the digital asset world. Planning ahead is the key to avoid delays or rejections of applications.
Further reading and source
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Bitcoin Brian Hogben Crypto Mortgage Strategy Ross Taylor
Last modified: August 17, 2025
