Written by: Internal Analysis & Opinion Writers
The Federal Housing Finance Agency (FHFA) has sparked debate in the mortgage industry by directing Fannie Mae and Freddie Mac to explore whether cryptocurrency assets should be considered in loan underwriting. The potential move signals a significant shift in how digital assets might be evaluated in determining mortgage eligibility.
FHFA Director Bill Pulte initiated the conversation publicly, urging the two government-sponsored enterprises to consider proposals that would treat crypto holdings—specifically those held on U.S.-regulated exchanges—as acceptable reserves. He emphasized that borrowers should not be required to liquidate their crypto assets to qualify for a mortgage, framing the move as a modernization of mortgage finance.
Proponents argue that recognizing crypto could reflect the growing importance of digital wealth. The Mortgage Bankers Association supported the effort in principle, stating it aligns with the evolving nature of asset ownership and borrower financial behavior. For some, it’s viewed as a logical next step in financial innovation.
Academics like Duke University finance professor Campbell Harvey agree that the move could help align risk assessment with 21st-century asset profiles. He noted that today’s borrowers often diversify their wealth across traditional and digital platforms, and ignoring crypto could be an outdated approach.
Yet the proposal has drawn sharp criticism from others in the financial community. Dan Immergluck, a professor emeritus at Georgia State University, criticized the move with heavy skepticism, comparing it to counting items like houseplants or silverware as financial reserves. He warned that this kind of flexibility echoes the dangerous lending behaviors seen before the 2008 financial crisis.
Christopher Whalen, a longtime housing and banking analyst, was more blunt, calling the idea “a really bad idea.” He argued that cryptocurrencies, unlike cash or insured deposits, lack the qualities of real assets under formal accounting standards. For him, the volatility and speculative nature of most cryptocurrencies disqualify them from being used as meaningful collateral.
Volatility remains one of the biggest sticking points. Amanda Fischer, policy director at the financial watchdog group Better Markets, noted that digital assets can swing wildly in value over short periods—sometimes losing as much as 40% in a matter of days. She also raised concerns about cybersecurity and exchange reliability, even for those regulated within the U.S.
On the other hand, industry participants like Cory Klippsten, a CEO of a bitcoin-centric financial firm, believe that allowing crypto as reserves could help legitimate borrowers who are asset-rich but cash-poor. He pointed out that selling crypto to qualify for a mortgage could incur capital gains taxes or disrupt a long-term investment strategy. Still, he recommended limiting eligibility to large-cap coins such as Bitcoin and Ethereum to reduce exposure to risk.
Regulators and consumer advocates are worried that the inclusion of digital assets could open the door to a new wave of financial instability. The specter of the subprime mortgage crisis looms large for many, who see parallels in the push to broaden underwriting guidelines without a robust risk management framework in place.
Industry organizations have called for safeguards. Some suggest a haircut model, where only a percentage of the crypto’s market value would count toward a borrower’s reserves. Others advocate for including only stablecoins or asset-backed tokens to provide more predictability and liquidity.
At the heart of the issue is whether digital assets can be consistently valued, secured, and accessed during the underwriting process. Critics argue that crypto’s lack of regulatory clarity makes it a poor fit for federally backed loans, especially when taxpayer dollars are involved.
Ron Haynie of the Independent Community Bankers of America emphasized the need for a clear regulatory roadmap before crypto is introduced into the mortgage ecosystem. He cautioned against making policy changes before there’s full understanding and oversight of how these assets behave across economic cycles.
As Fannie Mae and Freddie Mac begin developing formal proposals, the balance between innovation and stability will be crucial. If handled responsibly, the move could provide greater access to mortgage credit for a new generation of borrowers. But if implemented prematurely, it risks replicating the missteps of past financial bubbles.
The coming months will determine whether the housing industry embraces crypto as a legitimate financial reserve—or decides the risk still outweighs the reward.
