Wiess Ratings Agency Warns Mortgages Against Cryptocurrency
According to Weiss Ratings, crypto mortgages pose risks given the current economic situation in the U.S., and this type of product should be handled with caution.
A digital baking startup called Milo, based in Miami is among the companies the firm highlighted.
Jon D. Markman, Weiss analyst, mentioned Milo, which recently rolled out 30-year mortgages backed by coins such as Bitcoins (BTC), Ethereum (ETHs), or stablecoins.
Moreover, Milo's larger plan to pool crypto-backed mortgages for sale as bonds to asset managers and insurance companies raises concerns.
The report stated, “The product seems to be like a win-win, assuming real estate and crypto prices keep rising… except there are signs both bets are unlikely to be winners in the near term. Bitcoin is off by 40% since it reached $66,000 in November 2021.”
Even so, Markman did state that not all cryptocurrency risks are bad and that this could be true for the property sector. This statement followed his statement stating that “no matter what the markets are doing, the potential to succeed in cryptocurrencies is real.”
According to Weiss, dismal stock and digital asset performance this year, a housing bubble in the U.S., and rising interest rates are a few reasons to avoid crypto mortgages.
According to a recent Bloomberg report, Milo, which recently raised $17 million in Series A funding, has issued pre-approval letters on $340 million in new mortgages in the last 30 days. How much of the $340 million in mortgages are backed by cryptocurrency is unknown.
Josip Rupena, the founder of Milo, stated that he intended to sell the loans to banks, asset managers, and insurance companies in order to scale the company.
CBW - External Analyst