Block Earner raises $8m for Bitcoin-backed home loan deposits

Australian fintech Block Earner has secured an $8 million capital raise to advance its Bitcoin-backed home loan deposits, as institutional acceptance and blockchain token values soar through 2025.

The development comes after Block Earner successfully appealed a court challenge, brought by Australia’s corporate regulator, over the make-up of a separate financial product.

Block Earner acts as a cryptocurrency exchange, allowing users to buy and sell popular tokens like Bitcoin, Ethereum, Tether, and Solana.

But the startup’s major focus is expanding how customers use those on-chain assets.

It has developed a crypto-backed lending product, allowing customers to put up their digital assets as security for personal loans.

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Borrowers already use the two-year-old system to bolster their home loan deposits or fund renovations, inspiring Block Earner to build a fully-fledged home loan deposit product.

The proposed system will allow customers to borrow up to 60% of a property’s value for use as a deposit.

Interest on those loans, set at 9.5%, will be repaid in Australian dollars, extra Bitcoin, or a combination of the two.

Third-party lenders will provide the final mortgage.

Speaking to SmartCompany, Block Earner CCO James Coombes said pilots for the home loan deposit product are well underway.

“We’ll have people who have bought a home using our product long before the end of this year,” he said.

Growing market acceptance of crypto assets

Block Earner argues volatility among major cryptocurrencies like Bitcoin is stabilising, making the home loan deposit product feasible.

“We’re very confident today in the risk parameters,” said Coombes.

However, there are some protections built into the Block Earner plan, defending the startup against sudden movements in cryptocurrency values.

Under the scheme, customers will front significantly more in cryptocurrency than they receive in Australian dollars: for a $200,000 deposit, users will stump up Bitcoin worth $333,000 as collateral.

And if Bitcoin values drop, Block Earner says borrowers will have 30 days to fill the gap with extra Bitcoin top-ups or Australian dollar repayments before taking action.

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“We always advise borrowers to never use your entire Bitcoin stack with us,” said Coombes.

“You want to have something on the side so you can manage those periods.”

Should underlying Bitcoin valuations increase, borrowers can redraw on their Block Earner loan to pay more of their mortgage, or simply reduce the amount of cryptocurrency on the table.

The $8 million Series A round was led by Hong Kong’s CMCC Global through its Titan Fund, with participation from Australia’s King River Capital.

“It’s a very proud moment for us,” said CEO Charlie Karaboga.

“Our investors recognise that we will be the category leader, starting with Australia.”

Block Earner wants to be a “household brand” when it comes to cryptocurrency-backed credit, he added.

“We think that there will be a convergence between traditional finance and blockchain finance, and we are in the right place, on the intersection.”

The funding will go towards its Australian expansion and initial exploration of international markets.

Raise come after Federal Court challenge

News of the capital raise follows a high-profile federal court case, launched by the Australian Securities and Investments Commission (ASIC), over Block Earner’s Earner product.

In April, Block Earner successfully appealed a 2024 Federal Court decision that it provided unlicensed financial services and ran an unregistered managed investment scheme through the Earner fixed-yield product.

The Full Federal Court found Block Earner did not need a financial services licence to provide Earner, but ASIC in May sought special leave from the High Court to appeal that ruling.

Block Earner is keeping a close eye on those proceedings, but asserts the lending product is separate and offered under a credit licence authorisation.

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