The United States Federal Housing Finance Agency (FHFA) announced Tuesday it will study the potential use of cryptocurrency holdings as qualifying assets for mortgages, a move that could significantly alter the traditional lending landscape.

“We will study the usage of cryptocurrency holdings as it relates to qualifying for mortgages,” FHFA Director William Pulte stated.

The FHFA, which sets guidelines for government-sponsored enterprises Fannie Mae and Freddie Mac, could allow borrowers to list assets like Bitcoin or stablecoins as part of their mortgage qualification assessment if the ongoing study yields positive results.

The Current Regulatory Hurdle

Federal accounting rules, specifically SEC guidance issued in 2023 (SAB 121), previously prohibited US financial institutions from treating cryptocurrencies as assets on their balance sheets for certain products like crypto-backed mortgages. Instead, they had to report them as liabilities.

On January 23, the SEC formally rescinded this controversial guidance, paving the way for banks to integrate crypto-backed lending more formally. This development is central to the FHFA’s current review.

Potential Implications

Allowing cryptocurrencies as qualifying assets could enable a broader range of borrowers, including high-net-worth individuals with substantial crypto holdings but potentially lacking traditional assets, to access mortgages.

Specialized crypto lending companies already offer crypto-backed loans and mortgages. Wider adoption, potentially including offerings from traditional banks, could lead to new and varied lending products tied to digital assets.

Cryptocurrency and Real Estate Access

Recent reports indicate a growing trend of lower-income households in crypto-friendly areas using crypto gains to pay down mortgages or improve financial standing. Additionally, companies like Ledn have facilitated Bitcoin-backed loans for real estate purchases.