How precisely does one convince a mortgage underwriter that a volatile digital asset—one that can swing 20% in a single trading session—constitutes reliable collateral for a thirty-year fixed-rate loan? The answer, surprisingly, lies in new regulatory guidance that treats cryptocurrency holdings with the same reverence traditionally reserved for IBM stock certificates.
Fannie Mae and Freddie Mac have been mandated to develop proposals incorporating crypto assets into single-family loan risk assessments—a development that would have seemed fantastical just five years ago. The Federal Housing Finance Agency‘s guidance requires these government-sponsored enterprises to evaluate cryptocurrencies held on U.S.-regulated centralized exchanges as comparable to stocks and bonds, provided they implement appropriate risk adjustment measures for volatility. Decision No. 2025-360 represents the first formal evaluation framework for digital assets in mortgage underwriting processes.
The mechanics involve two primary structures: collateral-based arrangements where borrowers pledge Bitcoin or Ethereum holdings to lenders throughout the loan term, and asset qualification frameworks allowing crypto reserves to demonstrate net worth without liquidation into fiat currency. Importantly, only holdings on regulated exchanges like Coinbase or Gemini qualify—digital wallets and offshore platforms remain firmly excluded from consideration.
This regulatory shift addresses a peculiar modern predicament: tech entrepreneurs and early crypto adopters who possess substantial digital wealth but struggle to meet traditional mortgage qualification criteria without liquidating appreciating assets. Rather than forcing borrowers to convert cryptocurrencies to dollars before closing, lenders can now assess crypto holdings proportionally against overall reserves, applying standard financial asset risk frameworks. The transformation particularly benefits gig workers and other non-traditional borrowers who may have accumulated significant crypto wealth but lack conventional employment documentation.
The irony is palpable—institutions that once dismissed Bitcoin as “rat poison squared” now require sophisticated verification protocols to authenticate ownership on regulated exchanges. Risk mitigation measures scrutinize the proportion of crypto assets relative to total reserves, while regulatory oversight attempts to balance innovation with prudential supervision. Some lenders are exploring smart contracts to automate verification and reduce the need for intermediaries in the qualification process.
For borrowers, this development eliminates the need to scramble liquidating volatile holdings during qualification periods, particularly beneficial for jumbo loan applicants whose crypto portfolios might constitute significant portions of their wealth.
The proposals require board approval and FHFA review before implementation, reflecting institutional caution toward an asset class that can appreciate 400% annually or lose half its value within months—hardly traditional mortgage collateral behavior.
