The crypto mortgage bill introduced by Senator Cynthia Lummis calls for an update in U.S. mortgage lending rules to include digital assets in the evaluation process.
What Does the Crypto Mortgage Bill Propose?
The bill, known as the 21st Century Mortgage Act, requires government-backed entities like Fannie Mae and Freddie Mac to account for cryptocurrency holdings on public blockchains when reviewing mortgage applications. This would allow borrowers to retain their crypto assets without converting them into U.S. dollars.
Senator Lummis emphasized that digital assets have become a key part of young people's financial worth, and it's time for financial institutions to recognize this shift.
Why Is Senator Lummis Advocating for Crypto in Mortgages?
Senator Lummis believes that younger and older generations accumulate wealth differently. With only 36.6% of Americans under 35 owning homes— the lowest percentage since 1982— and 21% of U.S. adults now owning digital assets, the bill aims to align mortgage rules with the financial practices of younger Americans.
A policy expert from the Digital Asset Policy Alliance remarked, "Young people are saving and investing wisely, but banks still follow old rules that don’t recognize their crypto assets."
What Are the Criticisms Surrounding the Crypto Mortgage Bill?
Though the crypto mortgage bill aims to facilitate financial inclusion, it has faced criticism from lawmakers like Elizabeth Warren and Bernie Sanders. They warn that including crypto in mortgage evaluations could destabilize the housing market. In a letter to FHFA Director Pulte, they cautioned that "digital assets are too risky for something as critical as the housing sector."
They believe that crypto's price volatility poses financial risks and express concern that the value of crypto-backed assets may plummet during market downturns, potentially leading to foreclosures.
The crypto mortgage bill introduced by Senator Lummis could transform mortgage lending in the U.S., although it has sparked debate. It offers hope to younger individuals leveraging cryptocurrency to build wealth, but concerns about lenders' risks remain a prominent issue.
