Crypto as collateral? FHFA to count crypto in mortgage risk

An era of crypto integration into traditional finance is underway. In the latest development, the Trump administration has asked the Federal Housing Finance Agency (FHFA) to evaluate the role of cryptocurrency as an asset class by assessing the risk associated with single-family mortgage loans.

The move, signed by FHFA Director William J. Pulte earlier this week, ordered government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac to evaluate mortgage risk, especially among younger and more digitally native borrowers. The administration believes that cryptocurrencies, now held by millions of Americans, should be taken into account when assessing a borrower’s financial profile, particularly their liquidity and ability to repay loans.

The pros & cons of crypto assets

The decision comes at a time of increasing institutional embrace of crypto across banking, payments, and federal policy. Supporters argue that crypto-inclusive assessments would modernize the housing finance system and expand access to mortgages for Americans whose wealth is increasingly stored in digital wallets rather than traditional bank accounts.

But on the flip side, the inherent volatility of crypto assets could pose new risks for mortgage lenders and the broader housing market. Current underwriting models often overlook crypto assets due to concerns over volatility, regulatory uncertainty, and a lack of standardized reporting. However, the White House has urged the FHFA to explore mechanisms for securely and fairly incorporating crypto holdings into borrower assessments.

Under the directive, both enterprises have been asked to submit their assessment proposals to the boards of directors for approval, and post which the FHFA will conduct its final review. While the FHFA has not given any formal response to the latest order, the initiative aligns with the Trump administration’s broader push to foster innovation in fintech and embrace digital asset infrastructure.