The Trump administration wants to allow crypto-backed mortgages

In a groundbreaking shift for the U.S. housing finance system, the Federal Housing Finance Agency (FHFA) has directed its regulated entities — Fannie Mae and Freddie Mac — to consider cryptocurrency holdings as part of a borrower’s asset base when applying for a single-family home mortgage. (CNBC) Under the leadership of Bill Pulte, FHFA’s directive signals the administration of Donald Trump is embracing digital assets in a way few had anticipated. This article explores what the policy means, the motivations behind it, the potential benefits and risks, the broader context, and what it might signal for the future of home-ownership, mortgages and crypto integration.

Setting the Scene: Crypto Enters the Mortgage Market

Traditionally, mortgage underwriters have focused on the so-called “three C’s” of lending: Credit, Capacity, and Collateral. Assets held by a borrower—such as cash, stocks, retirement accounts—have often played a role in establishing financial reserves, down payment, or liquidity to support the loan. But digital assets—cryptocurrencies like Bitcoin (BTC), Ethereum (ETH) or other tokens—have largely been excluded from this asset mix, due to questions of volatility, lack of regulation or clarity, and issues of liquidity. (The MortgagePoint -)

On June 25, 2025, FHFA issued a directive instructing Fannie Mae and Freddie Mac to “prepare for counting cryptocurrency as an asset for a mortgage”. (CNBC) The guidance allows crypto holdings to be considered without requiring conversion into U.S. dollars—provided they are held on U.S.-regulated, centralized exchanges and can be evidenced. (CNBC)

This is a pivot for housing finance, aligning with Trump’s stated ambition to make the U.S. a hub for digital assets and reposition crypto from fringe to mainstream. (CNN)

Why the Administration Is Doing This: Motivations and Strategic Rationale

There are several intertwined motivations behind this policy shift.

Promoting Home-ownership and Expanding Credit Access

One publicly stated rationale is to expand access to mortgages by allowing owners of digital assets to leverage their holdings as part of their financial profile. According to estimates, if even a small percentage of crypto-holders qualify as borrowers, this could unlock billions in additional mortgage originations. (Independent Women) For example, one estimate suggested that if just 5% of mortgage borrowers included crypto assets, roughly 305,000 additional would qualify, supporting ~US$100 billion in originations. (Independent Women) In a climate of high housing costs and constrained affordability, this is an attractive policy leverage.

Recognising Crypto as an Emerging Asset Class

By treating cryptocurrencies as bona fide assets, the administration is signalling that digital-asset holdings are no longer “alternative” but part of household balance sheets. The directive states that “cryptocurrency is an emerging asset class that may offer an opportunity to build wealth outside of the stock and bond markets.” (CNBC) This aligns with a broader effort to integrate digital financial technology into mainstream finance.

Strategic Leadership & Regulatory Innovation

The policy fits within a broader agenda of the Trump administration to position the U.S. as a global leader in the digital-assets economy. Executive orders, regulatory shifts and legislative work (such as the GENIUS Act regarding stablecoins) underline this vision. (Wikipédia) By pushing the FHFA to integrate crypto-assets into U.S. mortgage markets, the administration is making a bold statement.

Boosting the Crypto Industry and Financial Innovation

For the crypto industry, this move is a major legitimisation. Assets that were once dismissed as speculative can now play a part in large-scale, traditional finance: home mortgages. This could spur new financial products, collaborations between lenders and crypto platforms, and innovation in collateralisation and underwriting.

How the Policy Works: Mechanisms, Scope and Conditions

Understanding the details of how this will work is key to assessing its impact.

Asset Eligibility and Custody Requirements

Under the directive:

Only crypto assets held on U.S.-regulated, centralized exchanges will qualify. Self-custody wallets are excluded. (Decrypt)
The assets must be evidenced, meaning borrowers should show verifiable holdings, history, and possibly reserves. (Cointelegraph)
Fannie Mae and Freddie Mac must design internal systems to account for crypto’s volatility, risk of loss, counterparty risk and potential liquidity issues. (CNBC)

Treatment in Underwriting

The guidance allows crypto holdings to be treated as part of the asset pool of a borrower. It does not necessarily mean using crypto as direct collateral for the home itself (i.e., the home remains collateral in a mortgage). Rather, the holdings bolster the borrower’s liquidity/risk profile, enabling them to more easily qualify. (The MortgagePoint -)

Timeline and Execution

The directive instructs Fannie and Freddie to submit proposals on how crypto can be integrated into underwriting, assess risks, make policy adjustments, and implement compliance measures. (CNBC) Implementation will likely roll out in stages and may vary by lender and product.

Limitations & Safeguards

Several safeguards are built in (or proposed):

Borrowers still must meet standard credit, income, collateral requirements. Crypto is only part of the mix. (Cointeeth)
Due to volatility, lenders may apply haircuts, limits on what portion of mortgage qualification can be based on crypto assets, or require the assets to be “seasoned” (held for a minimum period). (The MortgagePoint -)
The policy currently focuses on single-family home loans under agency guidelines. Broader adoption will depend on broader rule-making.

Potential Benefits and Opportunities

If effectively implemented, the crypto-backed mortgage policy could yield several benefits:

Increased Home-Ownership

Many individuals have accumulated significant digital-asset holdings but face difficulty qualifying for traditional loans because their balance sheet lacks conventional assets. Enabling crypto holdings to count could open home-ownership to a new segment, especially younger households. According to one estimate, ~$100 billion in additional originations could be unlocked if enough borrowers include crypto. (Independent Women)

Liquidity Efficient Use of Assets

Previously, many crypto-holders would have to sell their assets (thereby triggering taxable events) to convert to cash before applying for a mortgage. With the new policy, they may be able to retain their crypto holdings while leveraging their value as part of a loan application. This boosts liquidity efficiency and may reduce selling pressure on crypto assets.

Institutional and Industry Growth

Mortgage lenders, crypto custodians, exchange platforms and fintech firms may build products around crypto-backed lending/reserves. Infrastructure for verifying on-chain assets, custody audits, volatility modelling and lender workflows could see rapid development. This could accelerate wider institutional adoption of crypto.

Policy Signal and Innovation Leadership

By being the first major national housing-finance regulator to integrate crypto holdings, the U.S. may gain a competitive advantage in fintech adoption, innovation, digital asset regulation and financial market evolution. This can promote private-sector investment and strengthen competitiveness.

Risks, Criticisms and Challenges

Despite the promise, the policy introduces significant risks and raises major questions.

Asset Volatility and Borrower Risk

Cryptocurrencies are notoriously volatile. For example, Bitcoin has seen double-digit percentage swings in weeks. While crypto holdings may appear as substantial assets when markets are high, sharp downturns could quickly erode value — potentially undermining a borrower’s liquidity cushion. (Reuters) If a borrower’s financial strength is partly based on crypto which then crashes, this increases risk of default and systemic risk for lenders.

Liquidity and Custody Concerns

The policy restricts eligibility to assets held on regulated centralized exchanges—but even then, exchange risk (cyber-hacks, regulation, insolvency) and asset liquidity issues remain. This complicates lender underwriting: can assets be liquidated quickly if needed? What if the exchange halts withdrawals?

Consumer Protection & Financial Stability

Many lawmakers have raised concerns. A letter from Democratic senators (including Elizabeth Warren and Bernie Sanders) demanded further analysis of systemic risk and borrower protections. (Business Insider) They argue that integrating crypto into mortgages could replicate elements of the sub-prime crisis: risky assets + lax underwriting = financial instability.

Uneven Implementation and Complexity

Underwriting crypto-backed mortgages introduces complexity: verifying asset provenance, exchange custody, blockchain traceability, valuations, applying haircuts, integrating into loan systems and ensuring compliance with consumer-protection rules. Lenders may face higher operational burdens and potential legal/regulatory exposures.

Market Timing and External Shock Risk

If the policy becomes widespread, a large wave of crypto-asset-rich borrowers might enter the housing market. But if crypto markets contract or regulation tightens, the interplay could amplify market risks across assets and real estate. Moreover, using crypto assets may limit diversification: a downturn in digital assets coinciding with a housing downturn could be perilous.

Broader Context: The Move in Industry and Regulatory Landscape

This mortgage policy is part of a broader wave of crypto integration across financial markets and regulation:

Crypto in Retirement, Banking & Finance

The Trump administration has moved to allow alternative assets—crypto among them—to be included in 401(k) retirement plans. (New York Post) Banks and financial institutions are also being encouraged to engage more fully with digital assets. These moves reflect a wider transformation of how crypto is viewed by regulators and markets.

Regulatory Framework & Legislation

The passage of the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins) in mid-2025 illustrates a regulatory push to bring stablecoins and digital-asset firms into a clearer legal framework. (Wikipédia) The mortgage policy aligns with a broader shift toward normalization of crypto assets rather than their exclusion.

Historical Parallel: Financial Innovation Integration

In many ways, this resembles prior financial innovations (e.g., credit scoring, securitisation, derivatives) which initially were outside mainstream underwriting then gradually integrated (with regulatory, risk-management adaptations). The question will be whether the integration of crypto will follow a smooth path—or encounter shocks.

What It Means for Home Buyers, Lenders and the Industry

For Home Buyers

Those holding significant crypto may find it easier to qualify for mortgages without liquidating their assets—preserving potential upside and deferring taxable events.
Applicants must ensure assets are held on acceptable platforms, meet regulatory requirements, and that lenders recognise them.
Borrowers should still be cautious: crypto holdings are volatile, and lenders may apply conservative haircuts or limit the portion of eligibility derived from digital assets.

For Lenders & Mortgage Industry

Lenders will need to adjust underwriting models, update asset-verification processes, incorporate haircuts for volatility, and manage regulatory/compliance risk when including crypto assets.
There may be new partnerships between mortgage lenders and crypto custodians/exchanges to certify holdings, custody quality and liquidity.
Product innovation could follow: crypto-asset-aware mortgage programs, hybrid loans, or collateral structures where digital assets support but do not replace traditional collateral.

For the Crypto Industry

The policy legitimises crypto as part of mainstream finance and balance sheets. Custodians, exchanges and blockchain-analytics firms could see increased business.
Asset holders may view home-ownership as more accessible, boosting demand for digital assets.
However, crypto firms and exchanges will face increased scrutiny, compliance obligations and must ensure transparency, custody security and regulatory alignment.

For the Housing Market & Economy

The move could slightly expand the pool of eligible borrowers and support home-ownership—particularly among younger or tech-savy asset-holders.
But it also introduces new collateral dynamics and risk vectors—if crypto holdings fall sharply, the ripple could impact mortgage defaults, real estate values or broader financial stability.
The timing matters: with housing affordability stretched, interest rates elevated and housing market growth now more moderate, the addition of new asset types may help, but won’t resolve structural challenges in housing supply and affordability.

What Needs to Happen for Success… and What Could Derail It

Preconditions for Success

Lenders must adopt robust underwriting frameworks that incorporate crypto assets carefully, with haircuts and conservative valuations.
Clear rules and guidance must be published (by FHFA, CFPB)/regulators so that lenders, borrowers and custodians know the standard.
Crypto exchanges/custodians must step up custody, transparency and regulatory compliance to meet lender and regulator expectations.
Market participants—borrowers—must understand risks (volatility, liquidity) and lenders must communicate clearly.
Monitoring and risk management systems must be updated to track correlation between crypto asset performance and housing finance exposure.

Potential Pitfalls or Derailers

A sharp crash in crypto markets could cause borrowers to lose value, raising default risk and triggering lender losses.
Lenders might mis-price risk, leading to under-reservation or inadequate haircuts, potentially replicating prior financial crises.
Regulators or consumer-protection agencies might push back if the process results in borrower harm or exploitative practices.
Implementation lags or inconsistent adoption across lenders could lead to uneven market impacts, unfair treatment, or legal complications.
External shock to housing or financial markets combined with crypto asset decline could amplify systemic vulnerabilities.

The headline “The Trump administration wants to allow crypto-backed mortgages. Here’s why.” encapsulates a bold and consequential shift. By allowing crypto holdings to count as assets in mortgage underwriting, the administration is integrating digital assets into one of the most foundational sectors of the economy—housing finance. This move promises to expand access, bring new asset types into the mainstream, stimulate innovation, and re-frame crypto’s role in household balance sheets.

However, the integration is not without risk. Crypto’s volatility, liquidity concerns, regulatory gaps, and potential for borrower mis-estimation present serious challenges. Whether the policy succeeds will depend on careful implementation: strong lender frameworks, clear regulatory guidance, and protecting borrowers from unintended consequences.

For borrowers, lenders, the crypto industry and the housing market at large, this could be a transformative moment—opening new pathways to home-ownership and financial inclusion. But with transformation comes responsibility. If implemented thoughtfully, the policy may set the stage for a new paradigm of digital-asset-enabled finance. If mis-managed, it could introduce new vulnerabilities.

In essence, the future of “crypto-backed mortgages” is less about the headline and more about the structural evolution of how we define assets, how we assess credit risk, and how home-ownership is financed in a digital age. We are witnessing a frontier where technology, finance and housing converge—and the decisions made now will shape the housing and financial landscape for years to come.