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Freddie Mac and Fannie Mae – two of the biggest home loan financers in the US – were recently ordered by the Federal Housing Finance Agency (FHFA) to consider cryptocurrency as an asset when entering a mortgage.
This has the potential to have massive ramifications not only for the US but also Australia as crypto becomes more accepted.
US President Donald Trump has been a long-time embracer of crypto and has plans to make the US the “crypto capital of the planet.”
This latest move from his administration means that if someone owns crypto, it could help them secure a mortgage just as having cash in a bank account would.
DigitalX portfolio manager Hannah Pham said the case of Freddie Mac and Fannie Mae is a “landmark moment for digital finance” and “enhances financial inclusion for a new generation of investors.”
The FHFA said that only crypto held on US-regulated exchanges will benefit from this treatment. However, it does have the potential to be far-reaching.
Emir Ibrahim, associate at digital asset trading firm Zerocap, said the decision is a clear example of crypto’s “growing integration into the financial mainstream.”
“It further signals that digital assets are not just notoriously known for speculative investments, but a legitimate financial tool by mainstream financial institutions,” he said.
“Though we expect that the integration of crypto into mortgage criteria may be slow to begin with, this is a great phase, which will likely broaden and force other players in the industry to reconsider their stances.”
Despite this, Ibrahim said the volatility of digital currencies may prove a problem and the risks will need to be weighed up before widespread acceptance.
Will Australia follow suit?
While the US is becoming far more tolerant of crypto, Australia has a long way to go.
According to Ibrahim, he can’t see the same treatment happening with domestic lenders in the foreseeable future.
He said that regulators still view crypto as a “speculative asset” that makes it harder to maintain financial stability and protect consumers.
“Until we see a clear regulatory framework that addresses the underlying risks, Australian regulators will likely remain conservative about integrating crypto into mortgage assessments. In terms of policy around crypto in general, it is clear that we’re still behind in many different pillars compared to other jurisdictions, like the US,” said Ibrahim.
“The key issue for Australian lenders will be volatility. If Australia were to allow crypto in mortgage calculations, we’d likely see lower acceptance ratios. Lenders will have to factor in substantial risk premiums, and that would likely mean offering higher rates to account for the volatility.”
Still, this decision could make way for new ways of thinking and could initiate discussions on the relationship between crypto and mortgages.
Ibrahim believes that this latest example could make way for “crypto-collateralised loans” that explicitly cater towards crypto.
There is also the potential for non-banks and start-ups that offer crypto-backed home loans to cater to this niche.
Others are more receptive to the idea. Monochrome is an Australian specialist investment management firm offering leading regulated access to crypto assets.
Bridget Nichols, chief operating officer at the company, believes Australia will follow suit due to the amount of crypto-related wealth here.
She said crypto is now recognised by some digital asset lenders as eligible asset to collateralise against in Australia.
“We are of the view that this will fundamentally change lending opportunities for bitcoin and bitcoin ETF holders in Australia and abroad. We are at a pivotal moment in bitcoin adoption, and the future looks innovative and bright,” said Nichols.
With the acceptance of crypto on the rise and the shifting needs of the consumer inciting rapid change in lending, crypto could play a stronger role in mortgage serviceability in the future.
