FHFA Orders Fannie Mae Freddie Mac to Consider Crypto in Mortgage Loans

The U.S. Federal Housing Finance Agency (FHFA) has issued a directive ordering Fannie Mae and Freddie Mac to formally consider cryptocurrency as an asset in single-family mortgage loan risk assessments. This move, signed by FHFA Director William J. Pulte, marks a significant shift in the U.S. housing finance system, integrating cryptocurrency into the core of American home lending. The directive instructs both housing finance giants to develop proposals that include digital assets without requiring borrowers to liquidate them into U.S. dollars prior to loan closing. This decision aligns with President Donald Trump's vision to position the United States as a global leader in cryptocurrency.

Historically, cryptocurrency has been excluded from underwriting frameworks due to its volatility, regulatory uncertainty, and the difficulty in verifying reserves. However, this new directive aims to address these concerns by restricting consideration to digital assets stored on U.S.-regulated, centralized exchanges and requiring clear evidence of these assets. The order also mandates that Fannie Mae and Freddie Mac develop internal adjustments to account for crypto's market volatility, ensuring that any risk-weighted reserves comprised of crypto do not compromise underwriting standards.

The FHFA's decision comes at a time when there is increasing institutional embrace of crypto across various sectors, including banking, payments, and federal policy. The order acknowledges cryptocurrency's growing role in household financial portfolios, stating that it may offer an opportunity to build wealth outside of traditional stock and bond markets. This recognition of crypto's potential is a significant step towards its mainstream acceptance in the financial industry.

Under the directive, both Fannie Mae and Freddie Mac must submit their assessment proposals to their respective boards of directors for approval and then to the FHFA for final review. This process ensures that the integration of cryptocurrency into mortgage underwriting is thoroughly vetted and compliant with existing regulations. The move is expected to benefit homebuyers who hold significant amounts of cryptocurrency, as it allows them to use these assets as collateral without having to sell them, potentially avoiding tax implications.

The FHFA's directive is a landmark decision that could reshape the U.S. housing finance landscape. By allowing cryptocurrency to be considered as an asset in mortgage risk assessments, the agency is paving the way for greater financial inclusion and innovation in the housing market. This move is likely to encourage more homebuyers to explore cryptocurrency as a viable asset class, further integrating it into the broader financial ecosystem.

Market leaders have projected that the update could reduce selling pressure on Bitcoin (BTC). Michael Saylor, Founder of Strategy, praised the crypto inclusion, stating that the move is ‘historic’ for the two industries. He added that the inclusion could primarily benefit Bitcoin. "Future generations will remember this as the moment Bitcoin entered the American dream." Most industry leaders have been echoing this line of thought, where BTC is used as collateral for liquidity, instead of holders selling their stash to cover bills. Hunter Horsley, CEO of digital asset manager Bitwise, projected a likely maturation and tapered sell-off when BTC peaks around $130K. Charles Edwards, founder of macro hedge fund Capriole Investment, is also inclined towards Horsey’s projection. Reacting to the crypto-backed loans update, he noted, "Millions of BTC now no longer need to be sold. Big news." Overall, the U.S. housing agency’s move could reduce future selling pressure on BTC as it becomes key collateral for securing loans and liquidity without necessarily offloading one’s stash.