Bitcoin Chases American Dream In Norm-Shattering Mortgage Push

What was once dismissed as a fringe fantasy by a niche band of crypto believers is now being tentatively examined by the government-sponsored entities at the core of the US housing market.

In late June, federal officials directed Fannie Mae and Freddie Mac to study whether digital assets held on US regulated exchanges might someday be factored into mortgage risk assessments — the process lenders use to determine whether a borrower has the financial clout to make good on their debt.

Including crypto in that calculation would mark a seismic shift that would catapult digital assets from the speculative sidelines into the heart of the mainstream. If adopted, the policy would mark one of the most practical use cases for crypto yet: bringing it into the architecture of the American dream.

No rule has changed yet. No policy has been implemented. Any potential change is still in early stages and requires approval. But the order reinvigorates a debate the housing-finance establishment has long brushed aside: Should Bitcoin be counted as a regular wealth-boosting asset for the purposes of underwriting a loan?

It’s a big question. The mortgage securitization system is built around uniformity: regulated custody, predictable valuation, dollar-denominated liquidity. Crypto resists all of that. Its volatility defies stress testing. Ease of trade isn’t guaranteed when it comes to many digital tokens. And its custody systems aren’t recognized by federal-lending protocols.

Under the traditional process, borrowers whose wealth sat in crypto had to convert it into cash, often months in advance, to “season” the funds and ensure legitimacy. That prevented digital assets from functioning as a stable input in mortgage underwriting. The new Federal Housing Finance Agency directive doesn’t alter the current rules, but by prompting formal review, it sets in motion a process that could reshape them.

If crypto is eventually allowed to count toward mortgage eligibility without being liquidated, borrowers could retain their tokens instead of converting them to meet reserve requirements. That turns it into a wealth-effect channel, opening up an avenue for online currencies to play a role in a vital sector of the US economy. 

To be sure, while a borrower’s assets — crypto or otherwise — do play a role in mortgage approval, they aren’t primary drivers of the loan decisions in contrast to income, credit score and property value. And inclusion doesn’t mean equivalence: Digital assets, if accepted, would likely be subject to valuation haircuts or other guardrails.

Startups like Milo already offer Bitcoin-backed mortgages. The Miami-based lender lets borrowers pledge digital assets as collateral without converting them to cash. But these loans fall outside conforming frameworks — they’re pooled and sold to private buyers, not backed by Fannie or Freddie.

Josip Rupena, Milo’s founder and CEO, said many of his clients are longtime crypto investors who have delayed homeownership because they didn’t want to liquidate their positions. For these so-called HODLers — investors who vow to “hold on for dear life” — the new directive is “a positive,” said Rupena, a former financial adviser at Morgan Stanley.

“That was a personal pain point when we tried to qualify for mortgages,” said Cory Klippsten, chief executive of Bitcoin services provider Swan, who had to put more cash down when he bought his home several years ago rather than tap into his Bitcoin wealth.

FHFA Director Bill Pulte, who ordered the review, has publicly advocated for Bitcoin and disclosed personal ownership in the digital currency, as well as shares of Mara Holdings Inc, a US crypto-mining firm. The move aligns with a wider Republican effort to deepen crypto’s integration into federal finance. And with Pulte — an ardent backer of President Donald Trump who called on Congress to investigate Federal Reserve Chair Jerome Powell — at the helm, the proposal might advance at a brisk pace.

“It feels motivated more by a general political inclination to be more supportive of the crypto industry rather than any sort of economic analysis or stakeholder engagement,” said Amanda Fischer, policy director and chief operating officer at Better Markets, a left-leaning Washington think tank. 

The FHFA’s memo, which outlines a study, restricts the evaluation to assets held on centralized, US-regulated exchanges, excluding crypto stored in private wallets or outside regulated platforms. Any formal proposal would still need approval from both Fannie and Freddie’s boards and the agency itself. A spokesperson for the FHFA didn’t respond to a request for comment on where the process stands.

For years, crypto advocates have pushed for broader adoption of digital assets as payment or collateral. Their efforts have been stymied by steep price volatility and a lack of clear policy. But the tone has shifted under a Trump administration that’s eager to transform online currencies into key components of the American financial system.

Questions remain, such as how regulators would account for extreme price swings on top of potential cyber threats. Other challenges include custodial risks — the platform holding the assets might go bankrupt, for instance — fraudulent documentation and unforeseen complications. 

“There are unknown risks in crypto that maybe will not be fully accounted for,” said Daryl Fairweather, chief economist at residential real estate brokerage Redfin. 

Risks aside, the proposal is of a piece with crypto’s move toward legitimacy, from the rollout of Bitcoin exchange-traded funds to new industry regulation now being debated in Congress. In recent months, banks like JPMorgan Chase & Co. have expanded collateral frameworks to include crypto-linked ETFs, particularly in private wealth channels. 

Redfin in a May survey found that 5.4% of recent homebuyers sold cryptocurrency to help fund their down payment. In San Francisco, broker Alexander Lurie has seen the dynamic first-hand. His team at The Lurie Group saw a 35% increase in crypto-wealth-enabled home purchases over the past year. 

“Banks are not yet incorporating crypto assets into underwriting, and the current frameworks remain unchanged,” he said. “This is a meaningful step toward modernizing mortgage finance, but we’re still very early.”