The U.S. Housing agency is on the brink of a major shift by potentially accepting cryptocurrency as a reserve for home loan applications. This groundbreaking move, projected to reduce selling pressure on Bitcoin (BTC), could mark a significant milestone in the convergence of the crypto and traditional finance (TradFi) sectors.
In a directive issued on the 25th of June, the U.S. Federal Housing Finance Agency (FHFA) instructed Fannie Mae and Freddie Mac to consider cryptocurrency as an asset class for single-family mortgage risk assessments. This directive, signed by FHFA Director William J. Pulte, allows loans to close without the requirement of converting cryptocurrency into U.S. dollars beforehand.
The guidance from the FHFA stated, “U.S. Federal Housing FHFA hereby directs each Enterprise to prepare a proposal for consideration of cryptocurrency as an asset for reserves in their respective single-family mortgage loan risk assessments, without conversion of said cryptocurrency to U.S. dollars.” Pulte emphasized that this move is historic for both industries and aligns with President Trump’s pro-crypto vision for America, with implementation expected to be swift.
Previously, crypto holdings were often disregarded in mortgage underwriting unless liquidated into cash. However, the new directive permits crypto assets, stored on U.S.-regulated centralized exchanges, to contribute to reserve assessments.
The reaction from industry leaders was swift, with Michael Saylor, Founder of Strategy (formerly MicroStrategy), praising the inclusion of crypto assets. Notably, JPMorgan Chase was the first major U.S. bank to embrace crypto ETFs as loan collateral, signaling a shift towards digital assets in the traditional banking sector.
With regulatory rollbacks and increasing acceptance of digital assets in various jurisdictions like South Korea and the United Arab Emirates (UAE), the global pivot towards crypto integration seems imminent. Saylor highlighted that Bitcoin stands to benefit the most from this inclusion, as it could become a key collateral for securing loans and liquidity without the need to sell off holdings.
Industry experts like Hunter Horsley, CEO of Bitwise, projected that the trend of using BTC as collateral could reduce selling pressure on the cryptocurrency over time. Charles Edwards, founder of Capriole Investment, echoed this sentiment, noting that millions of BTC may no longer need to be sold, marking a significant development in the market.
Overall, the U.S. housing agency’s decision to accept cryptocurrency as a reserve for home loan applications could pave the way for a decreased selling pressure on BTC, as it becomes a vital collateral for securing loans and liquidity without the necessity of selling off assets. This move signifies a significant step towards the integration of crypto assets into the traditional finance sector, setting the stage for a new era of financial innovation.