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The Federal Housing Finance Agency (FHFA) has directed Fannie Mae and Freddie Mac to recognize cryptocurrency as an asset in their assessments of single-family mortgage loan risks. 

This directive, issued by FHFA Director William J. Pulte, marks a pivotal moment in the integration of digital assets within the traditional finance framework, particularly in the realm of home lending.

Crypto As Asset For Home Loans

According to CNBC, the order mandates that both Fannie Mae and Freddie Mac create proposals that allow borrowers to use digital assets without needing to convert them into US dollars before closing a loan. 

Pulte emphasized that this initiative aligns with President Donald Trump’s vision of positioning the United States as a global leader in cryptocurrency.

Historically, cryptocurrency has been largely excluded from mortgage underwriting due to concerns over its volatility, regulatory ambiguities, and the challenges associated with verifying asset reserves. 

However, this new directive signals a shift in perspective, recognizing the increasing acceptance of crypto within institutional finance and federal policy.

A ‘Monumental Shift’

The FHFA’s order acknowledges cryptocurrency as an emerging asset class that could provide opportunities for wealth building outside of conventional stock and bond markets.

Yet, the directive specifies that only digital assets stored on US-regulated, centralized exchanges (CEX) will be considered, ensuring that these assets can be clearly evidenced. 

Additionally, Fannie Mae and Freddie Mac are required to implement measures to account for the “inherent volatility of cryptocurrencies,” ensuring that these assets do not jeopardize their underwriting standards.

Both enterprises will need to submit their proposals for assessment to their respective boards of directors and subsequently to the FHFA for final approval. 

Fannie Mae and Freddie Mac, which were placed under government control in September 2008 as government-sponsored enterprises (GSEs), play a crucial role in the US housing market, holding over $7 trillion in housing loans.

Market expert Echo X weighed in on this development in a recent social media post on X (formerly Twitter), asserting that the decision to allow digital assets as reserves represents a monumental shift. 

The expert noted that this change will enable borrowers to use their crypto holdings as part of their home loan qualifications, eliminating previous barriers that required users to liquidate their assets to qualify for loans. 

According to Echo X, this move opens the floodgates for genuine adoption of cryptocurrency within the housing market, signaling the dawn of a tokenized real estate market supported by the US mortgage system.

This decision caused an uptick in prices across the broader digital asset ecosystem, with Bitcoin (BTC) surging 1.5% toward $107,000 in the 24-hour chart. Consequently, the total crypto market cap also surged to $3.27 trillion.

Featured image from DALL-E, chart from TradingView.com

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