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Consumers take out mortgages to buy Bitcoin as ‘mania’ escalates

Tim Chen
Written By:
Tim Chen

The Bitcoin mania is showing no signs of abating, with some homeowners taking on credit and extending mortgages in order to get into the action, according to a US regulator.

In an interview with CNBC this week, securities commissioner of Alabama Joseph Borg said that amid all the cryptocurrency speculation, people are resorting to credit cards, equity lines and taking out mortgages to buy Bitcoins.

“This is not something a guy who’s making $100,000 a year, who’s got a mortgage and two kids in college ought to be invested in,” said Borg.

Bitcoin, the cryptocurrency, has been making headlines this year as it surged from $1,000 (£750.6) at the start of 2017 to around $19,000 (£14,261) on the Coinbase exchange last week.

At the time of writing, Bitcoin was selling at $17,250 – just over £13,000.

Bitcoin futures debuted on the Chicago Board Options Exchange (CBOE) recently, while futures on the cryptocurrency will be launched on the Chicago Mercantile Exchange (CME) on 18 December.

However, Borg said that he didn’t think futures contracts legitimised the digital currency.

Borg said that innovation and technology had traditionally outpaced regulation, and stressed that while futures contracts were regulated, Bitcoin itself is not.

“As [technology] continues to accelerate and continues to increase, regulators have got to understand what it is that the innovation’s coming up with and still trying to get educated,” said Borg.