A second risk is counterparty and regulatory uncertainty. These lenders operate outside the conventional, insured mortgage system, so the protections a borrower expects from a CMHC-insured product, including standardized disclosure and a minimum credit score threshold of 600, may simply not apply.
A third is liquidity risk on the way out. If the loan needs to be repaid or refinanced quickly and crypto values have fallen, a borrower can be forced to sell at a bad time to cover the shortfall, a problem a conventional mortgage secured against real property does not create.
Anyone considering this route should treat it as a specialized financial product, not a mortgage alternative. Get your hand-reviewed valuation from Joel Dyck.