Does the average US homebuyer want to back their mortgage with volatile cryptocurrencies like Bitcoin and Ethereum?
Probably not.
Yet William Plute, the newly appointed director of federal housing, brought the idea into focus on Wednesday when he ordered mortgage giants Fannie Mae and Freddie Mac to consider accepting a borrower’s crypto holdings in their criteria for buying mortgages from banks.
Analysts are digesting the notion, which could introduce a new layer of risk into the financial sector.
“Implementing this responsibly requires robust risk management frameworks,” Lamine Brahimi, a co-founder of Taurus, a digital asset custody firm, told DL News. ”Price volatility, custody security, and regulatory clarity are non-negotiables.”
Despite their increased institutional adoption in recent years, cryptocurrencies are still more volatile and risky compared to traditional assets.
According to a 2024 Fidelity report, Bitcoin has been three to four times more volatile than large cap stock indexes over the past four years.
“There are definitely reasons to be concerned,” Sean Tuffy, a financial regulation expert, told DL News. “A lot will depend on what the actual crypto underwriting guidance looks like.”
A better option?
Crypto-secured mortgages aren’t a new idea. In 2022, Florida-based startup Milo Credit started letting crypto-rich customers put up their Bitcoin and Ethereum for purchases of homes.
For some, borrowing directly against crypto is a better option than cashing out and incurring a hefty tax burden.
Private lenders accepting crypto collateral is one thing.
But Plute’s order, which he said is in keeping with President Donald Trump’s vision to make the United States “the crypto capital of the planet,” impacts government-sponsored mortgage buyers.
Fannie Mae and Freddie Mac are vital cogs in the US housing market, which is the number one source of wealth for American households.
If crypto-secured mortgages become common, it threatens to bake the increased risk more deeply into this crucial financial system.
“History has shown that when people start playing fast and loose with mortgage lending standards bad things happen,” Tuffy said.
The move has also rung alarm bells for many in the crypto industry, who compared the idea to the reckless lending practices that brought about the 2008 financial crisis.
These mortgages are solely collateralized with fartcoin and SXP6900? https://t.co/3exxVG2IhW pic.twitter.com/9W9tKmzp3h
— Rob Paone (@crypto_bobby) June 25, 2025
And Bitcoin, after all, was launched in response to that historic crisis.
Questionable quality
There’s also the issue of which cryptocurrencies will be recognised by financial institutions and mortgage brokers.
Plute’s order directs Fannie Mae and Freddie Mac “to consider only cryptocurrency assets that can be evidenced and stored on a US-regulated centralised exchange.”
That casts a wide net.
While it includes more established crypto assets like Bitcoin and Ethereum, which benefit from exchange-traded funds issued by financial giants BlackRock and Fidelity, it also includes many more assets of questionable quality.
For example, Coinbase, the biggest US-regulated exchange, has in recent months launched markets for popular memecoins Dogwifhat, Pepe, and Fartcoin.
While unlikely, these volatile joke tokens could theoretically be used to collateralise mortgages under Plute’s order.
Recent guidance from the Securities and Exchange Commission suggests that many cryptocurrencies — including memecoins — shouldn’t be classed as securities.
“If this is the case, then it’s hard to understand why they should be considered as assets for mortgages,” Tuffy said.
‘A defining moment’
Yet recognising crypto as mortgage collateral is also an acknowledgement of the asset class’ widening role in personal and corporate balance sheets, Brahimi said.
After all, asset manager BlackRock recommends a 1-2% allocation in Bitcoin for investors who wish to hold it, and even typically conservative pension schemes are diversifying into crypto.
Not all crypto boosters are against the idea, either.
Strategy chair Michael Saylor called the move “a defining moment for institutional BTC adoption and collateral recognition” in an X post.
“This means over 300,000 mortgage brokers and real estate agents in the USA are about to discover Bitcoin,” Anthony Bassili, head of allocators and tokenisation at Coinbase Institutional, said in an X post.
While it’s still early days, Plute’s order could influence how other governments address crypto’s role in their economies too.
“We expect other jurisdictions to watch this development closely, especially those already advancing digital asset regulation,” Brahimi said.
Tim Craig is DL News’ Edinburgh-based DeFi correspondent. Reach out to him with tips [email protected].
