Newmarket Capital, a lending firm that manages $3 billion in assets, has begun issuing mortgage and commercial loans that use Bitcoin as collateral.
Battery Finance is structuring loans that integrate a traditional real estate lien with a portion of the borrower’s Bitcoin holdings. The model maintains underwriting standards at institutional levels and keeps repayments denominated in dollars, thus aligning with conventional debt servicing practices.
One particularly noteworthy example is that in recent days, a subsidiary used approximately 20 BTC along with a multi-family building to refinance a $12.5 million loan, validating the scheme in a concrete transaction. The structure aims to offer liquidity without forcing the borrower to sell their crypto exposure.
The hybrid package is designed to mitigate Bitcoin’s volatility by anchoring the loan to relatively stable rental income and the underlying value of the property. To protect themselves, lenders apply valuation caps to the crypto component and require institutional custody, while highlighting the divisibility and on-chain liquidity of the digital asset as advantages over isolated real estate collateral.
Volatility and new dynamics for Newmarket Capital
Discounts applied to crypto collateral aim to absorb abrupt fluctuations, but extreme movements could require rapid revaluations or margin call adjustments. This introduces new operational requirements: dynamic pricing methodologies, settlement protocols, and coordination with custodians.
The integration of digital assets into balance sheets linked to mortgage loans raises questions about capital treatment, provisions, and stress testing. The acceptance of self-custodial assets, for example, remains uncertain under current schemes.
From the borrower’s perspective, the appeal is clear: access to liquidity without triggering an immediate tax event from the sale of crypto assets. For lenders, however, the proposal implies diversification of collateral and entry into a new client profile.
In market terms, the impact could be twofold. On the one hand, these loans could reduce selling pressure during bear markets by offering an alternative to liquidating holdings. On the other hand, they create a transmission channel between mortgage risk and crypto volatility, linking two traditionally separate asset classes.
