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.