Bitcoin News Today: Senator Lummis Proposes 21st Century Mortgage Act to Recognize Bitcoin and Digital Assets in Loan Eligibility

Senator Cynthia Lummis (R-WY) has introduced the 21st Century Mortgage Act, a legislative proposal seeking to revise federal guidelines to allow Bitcoin and other digital assets to be considered in mortgage loan eligibility assessments. The bill, announced in late June 2025, mandates that lenders evaluate applicants’ crypto holdings as part of creditworthiness determinations, marking a significant departure from current practices that exclude digital assets from traditional financial metrics [1]. Lummis emphasized the need to modernize mortgage frameworks to reflect the growing prevalence of digital assets among U.S. investors, stating, “This is about leveling the playing field for Americans who have invested in digital assets” [1]. The initiative aligns with Lummis’ broader advocacy for crypto-friendly policies, including a separate proposal to exempt small digital asset transactions under $300 from capital gains taxes [4].

The proposed legislation requires Fannie Mae and Freddie Mac to adapt their loan eligibility criteria to recognize digital assets as valid collateral or indicators of financial stability [1]. However, the Federal Housing Finance Agency (FHFA) has not yet issued formal guidelines or directives on the matter, leaving uncertainty about which assets would qualify and how lenders should assess their value [1]. The bill does not create new federal programs but mandates that existing agencies revise their rules to accommodate crypto assets.

Regulatory scrutiny and bipartisan opposition have emerged as key challenges. In a July 2025 letter, a group of bipartisan senators criticized the proposal, arguing that digital assets’ volatility and lack of consumer protections pose risks to both borrowers and lenders. They highlighted concerns about cybersecurity threats, unclear custody frameworks, and the potential for sudden devaluations to undermine loan security during economic downturns [3]. Critics also note that the Biden administration’s current regulatory focus on consumer safeguards and stablecoin oversight suggests skepticism toward measures that prioritize crypto adoption over risk mitigation [2].

Industry reactions remain mixed. While entities like Binance have cautiously endorsed the proposal as a step toward institutional acceptance of digital assets [2], traditional financial institutions and regulatory bodies have expressed caution. The initiative aligns with international precedents, such as Switzerland’s exploration of crypto-backed loans, but its implementation in the U.S. context remains untested. Analysts point to potential market adaptations, including increased institutional participation in crypto collateral lending, though the broader impact hinges on regulatory clarity and market stability [1].

The 21st Century Mortgage Act remains in its early stages, with hearings and negotiations expected in the coming months. Its passage faces political and regulatory hurdles, but if enacted, it could reshape lending practices by expanding homeownership opportunities for crypto holders. The debate underscores broader tensions between innovation and oversight in U.S. financial policy, with Lummis advocating for a forward-thinking approach and critics prioritizing risk management. For now, the bill’s fate will depend on its ability to navigate these competing priorities while addressing concerns about market volatility and consumer protection [2].

Sources:

[1] title1: Senator Cynthia Lummis Introduces Mortgage Act To Recognize Bitcoin in Loan Eligibility

url1: https://coingape.com/senator-cynthia-lummis-introduces-mortgage-act-to-recognize-bitcoin-in-loan-eligibility/

[2] title2: US Senator's Mortgage Bill Recognizes Crypto in Loan Eligibility Assessments

url2: https://cryptorank.io/news/feed/f983c-us-senators-mortgage-bill-recognizes-crypto-in-loan-eligibility

[3] title3: Senators Raise Red Flags Over Crypto In Mortgage Underwriting

url3: https://stocktwits.com/symbol/GALA.X

[4] title4: Lummis Proposes Capital Gains Exemption for Small Digital Asset Transactions

url4: https://www.jdsupra.com/legalnews/banking-regulators-clarify-crypto-8978629/