Federal Housing Finance Agency Director Bill Pault has directed Fannie Mae and Freddie Mac to draft a plan that would recognize crypto holdings as mortgage reserves without requiring conversion to cash. Given that these entities guarantee a majority of U.S. mortgages, the proposed approach could alter underwriting standards across a large portion of the housing market. The draft targets crypto held on regulated U.S. exchanges, such as Coinbase, and would require lenders to apply volatility-adjusted valuations.
Under the proposal, crypto assets pledged as reserves would be recognized without liquidation, offering borrowers with substantial crypto but limited cash a path to home ownership. The plan also seeks to minimize potential tax events from selling crypto holdings. Private lenders have begun to follow suit, with firms like Newrez and Rate launching non-institutional mortgage products backed by various assets, including Bitcoin, Ethereum, SEC-approved spot ETFs, and stablecoins.
The policy faces criticism from some lawmakers who warn that crypto volatility could threaten the broader housing system. Senator Cynthia Lummis has introduced the 21st Century Mortgage Act to codify FHFA guidelines. The crypto market now exceeds $2.4 trillion, and digital assets are increasingly integrated into mortgage underwriting, signaling that the question is no longer whether but when such practices will become standard.
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