Regulatory Storm Clouds Gather as Coinbase Expands into Crypto Mortgages

Coinbase partners with Better Home & Finance to offer crypto-backed mortgages, but faces a major revenue threat from a proposed US Senate bill banning interest on stablecoin deposits.

Coinbase is making a bold push into mainstream finance by launching a service that allows U.S. customers to use cryptocurrency for home purchases. This strategic expansion, however, coincides with significant regulatory challenges emerging from Washington D.C., where a proposed bill threatens a core revenue stream for the exchange.

A Novel Path to Homeownership

In an effort to bridge digital assets with everyday financial activities, Coinbase has introduced a mortgage product secured by cryptocurrency. The initiative, developed in partnership with lender Better Home & Finance and backed by government agency Fannie Mae, permits qualified U.S. buyers to use Bitcoin or the stablecoin USDC for their down payment. This structure enables investors to access real estate financing without being forced to sell their crypto holdings.

To mitigate the inherent volatility of cryptocurrencies, the program implements strict collateral requirements. For a $100,000 down payment, a buyer must pledge $250,000 worth of Bitcoin or $125,000 in USDC. The arrangement notably eliminates margin calls. Even if the value of the pledged digital assets fluctuates, the lending institution will not demand additional collateral as long as the borrower continues making regular mortgage payments.

Political Headwinds and a Clear Threat to Revenue

While the mortgage venture opens new markets, political developments pose a substantial risk. Coinbase recently rejected a compromise proposal from the U.S. Senate related to the draft "Digital Asset Market CLARITY Act." A leaked version of this legislation includes provisions that could prohibit companies from offering interest on stablecoin deposits.

Such a ban would strike at a vital financial artery for the exchange. Revenue generated from these specific services accounted for approximately 19 percent of Coinbase's total sales in the third quarter of 2025. This regulatory uncertainty is already impacting investor sentiment. The company's shares fell 18.27 percent over the past week, closing Friday's session at 139.70 euros.

Market Experts Maintain a Long-Term View

Despite the political friction and recent share price decline, several major financial institutions are reaffirming their confidence in Coinbase's prospects. Analysts at Goldman Sachs point to a potential cyclical bottom forming in the broader cryptocurrency market and maintain a "Buy" rating on the stock. Research firm Bernstein also confirms its "Buy" recommendation, highlighting Coinbase's long-term strategic position within an evolving financial infrastructure. Bernstein analysts have set a price target of $440 for the shares.

The stock's near-term trajectory is now heavily dependent on the legislative calendar. A Senate vote on the CLARITY Act is scheduled for the latter half of April. Until then, investors must balance the growth potential of the new crypto-mortgage business against the looming possibility of losing a lucrative interest-based income segment.