A new legislative proposal, the 21st Century Mortgage Act, seeks to incorporate cryptocurrency holdings into evaluating borrower risk for mortgage loans. Introduced by Senator Cynthia Lummis, the bill aims to modernize lending practices by acknowledging digital assets during risk assessments, potentially aiding young homeowners who hold cryptocurrencies.
However, Senate Democrats have voiced significant reservations. Their primary concern centers on the liquidity risks associated with cryptocurrencies, arguing that these assets cannot be quickly converted into cash to cover mortgage payments on short notice.
Parallel efforts are underway in the House of Representatives, which introduced the similar American Homeowner Crypto Modernization Act. This alignment highlights a broader Congressional focus on updating mortgage frameworks in the digital asset era.
Internationally, shifts are also occurring, with companies like Australia’s Block Earner developing Bitcoin-backed mortgage products. This signals evolving worldwide legal approaches to integrating crypto assets with traditional finance.
Lawmakers remain cautious regarding the inclusion of crypto in mortgage underwriting, citing ongoing anxieties about the assets’ price volatility and liquidity challenges as critical factors needing resolution.