The Federal Housing Finance Agency (FHFA) is exploring the potential use of Bitcoin as a qualifying asset for mortgage applications. This significant shift, aimed at expanding the pool of potential homebuyers in a challenging housing market, could substantially reshape lending practices but faces regulatory hurdles and concerns about crypto volatility.
This deliberation comes as mortgage applications remain near historic lows. Supply constraints and Federal Reserve monetary policy have significantly dampened activity. Including crypto holdings, particularly Bitcoin, could open doors for more borrowers, especially given the over 760,000 single-family mortgages the FHA originated.
The repeal of Staff Accounting Bulletin 121 (SAB 121) under the previous administration represents a key regulatory shift enabling crypto-backed lending evaluation. Advocates point to Bitcoin’s transparency and liquidity as potentially ideal collateral attributes under new frameworks.
However, substantial challenges remain. Bitcoin’s well-documented price volatility introduces risk assessments not present with traditional assets. Ongoing regulatory uncertainty at the federal level also clouds potential implementation paths. Proponents highlight the significant market potential, citing data showing approximately 20% of Americans own cryptocurrency, with the majority holding portfolios valued under $50,000.
If adopted, this policy would mark the first major federal recognition of cryptocurrency as a viable asset for qualifying for mainstream financial products like mortgages, signaling a potential shift toward integrating digital assets into core housing finance.