Mortgage Regulations Must Adapt to Cryptocurrency Realities
The Federal Housing Finance Agency (FHFA) recently proposed exploring cryptocurrency inclusion in mortgage risk assessments. This forward-thinking move could enable digital asset holders to qualify for mortgages without liquidating their holdings. For these regulations to work effectively, they must properly account for self-custody practices common in crypto markets.
Clarifying the FHFA’s Cryptocurrency Directive
Some have misinterpreted the FHFA’s guidance as requiring all crypto assets to be held on U.S.-regulated exchanges. In reality, the directive focuses on verifiability through regulated infrastructure, not exclusive exchange custody.
Why Self-Custody Matters in Cryptocurrency
- Provides greater transparency and auditability
- Reduces reliance on third-party custodians
- Enables direct verification through blockchain records
Building a Practical Framework for Crypto Mortgages
Effective regulation should accommodate both self-custody and exchange-held assets, provided they meet clear verification standards. This balanced approach would maintain security while recognizing crypto’s unique characteristics.
Moving Forward with Crypto-Inclusive Mortgage Policies
The FHFA has an opportunity to modernize housing finance by developing regulations that work with cryptocurrency‘s decentralized nature rather than against it. Thoughtful policies in this area could benefit both lenders and borrowers in the evolving digital economy.
