The opening of US institutions to the use of Bitcoin and cryptocurrencies as collateral for mortgages represents a structural change in the relationship between traditional finance and digital assets.
FHFA's Mortgage Innovation
The new director of the Federal Housing Finance Agency (FHFA) , Bill Pulte , recently launched an initiative that could be a historic turning point for the U.S. housing industry. In a widely reported announcement, Pulte said the agency is exploring the use of cryptocurrencies and blockchain technology in mortgage lending processes , with the goal of modernizing and digitizing the entire industry infrastructure. Two days after the initial announcement, an official directive was issued to major government-sponsored entities, Fannie Mae and Freddie Mac , calling on them to actively explore practical ways to integrate digital assets and distributed ledger technology (DLT) into their operations.
The central idea is that blockchain, with its transparency and immutability, could significantly improve the security and efficiency of underwriting processes, reducing mortgage approval times , cutting bureaucratic costs and minimizing the risk of fraud. Furthermore, the use of cryptocurrencies could simplify the traceability of funds and foster greater financial inclusion, allowing even those without access to traditional banking channels to participate in the real estate market.
Powell: “Bitcoin is mature and increasingly mainstream”
During his testimony on June 25 before the Senate Banking Committee, Federal Reserve Chairman Jerome Powell then made significant statements about the current state of the crypto industry, stating that Bitcoin and digital assets have reached a higher level of maturity and are becoming more mainstream. His remark came in response to a question from Senator Cynthia Lummis , a well-known advocate of cryptocurrency-friendly regulation, who questioned the Fed chairman about the risks associated with stablecoins and the possibility of withdrawing the controversial policy enacted in January 2023 under Section 9(13) .
This section gives the Federal Reserve the authority to regulate the activities of its member state banks, and was used to issue a restrictive policy statement against “new” activities, such as token issuance on public and decentralized blockchains, that were deemed potentially inconsistent with safe and sound banking practices. Powell made clear that the regulation was part of a broader regulatory framework that was not limited to cryptocurrencies, but that the growth of the sector and greater technological understanding by institutions are now prompting a review of many of the decisions made during the Biden administration.
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