Paper Type
Short
Paper Number
PACIS2026-1740
Description
The rapid integration of cryptocurrencies into mainstream finance has introduced a novel form of digital collateral into the mortgage lending landscape, yet the consequences for traditional real estate-backed lending applications remain poorly understood. Integrating the Technology–Organization–Environment (TOE) framework with the core-satellite investment model, this study investigates if crypto-backed products displace conventional real estate-backed applications. Utilizing traditional mortgage application records from a financial institution adopting crypto-collateral in 2022, we find that crypto-backed mortgages significantly reduce traditional mortgage approval rates. This "crowding out" effect is intensified by regional cryptocurrency legitimacy and housing illiquidity, while mitigated by property information insensitivity and speculative concerns. Furthermore, results reveal heterogeneous impacts across demographics: this innovation potentially exacerbates racial discrimination while alleviating age-based disparities. These findings underscore the complex interactions between emerging fintech and traditional mortgage lending, suggesting that collateral innovation may redistribute credit access across diverse market segments.
Recommended Citation
Xiang, Junhao, "Replacing Physical Collateral with Cryptocurrencies" (2026). PACIS 2026 Proceedings. 4.
https://aisel.aisnet.org/pacis2026/blockfintech/blockfintech/4
Replacing Physical Collateral with Cryptocurrencies
The rapid integration of cryptocurrencies into mainstream finance has introduced a novel form of digital collateral into the mortgage lending landscape, yet the consequences for traditional real estate-backed lending applications remain poorly understood. Integrating the Technology–Organization–Environment (TOE) framework with the core-satellite investment model, this study investigates if crypto-backed products displace conventional real estate-backed applications. Utilizing traditional mortgage application records from a financial institution adopting crypto-collateral in 2022, we find that crypto-backed mortgages significantly reduce traditional mortgage approval rates. This "crowding out" effect is intensified by regional cryptocurrency legitimacy and housing illiquidity, while mitigated by property information insensitivity and speculative concerns. Furthermore, results reveal heterogeneous impacts across demographics: this innovation potentially exacerbates racial discrimination while alleviating age-based disparities. These findings underscore the complex interactions between emerging fintech and traditional mortgage lending, suggesting that collateral innovation may redistribute credit access across diverse market segments.
Comments
06-Fintech