Fannie Mae and Freddie Mac, the largest buyers of mortgages, effective immediately are required to count cryptocurrencies as an asset for mortgages. This is a profound shift in policy. How will this impact real estate lending? Will Cryptocurrency radically alter real estate?
What was in the new cryptocurrency directive?
“FHFA has now determined that the consideration of additional borrower assets in the Enterprises’ single-family mortgage loan risk assessments may enable the Enterprises to assess the full spectrum of asset information available for reserves and to facilitate sustainable homeownership to creditworthy borrowers,” the order read.
Fannie and Freddie may only consider crypto assets that can be stored on a centralized exchange regulated in the US, it added, while they must also take into consideration adjustments for market volatility and risk-based adjustments to the share of reserves made up of cryptocurrency.
Opening the door to the use of crypto in mortgages marked a “historic day” for both the cryptocurrency and mortgage industries, Pulte said.
What does the cryptocurrency rule mean for mortgages
I thought this directive was a bit interesting. Looking at any indicator, residential real estate is at an inflection point with considerably more downside risk than upside risk. At the same time the stock market is trading at historic highs. By most metrics we are at or near a peak both in real estate and in the stock market which means there can be considerable downside risk ahead
Furthermore there is a high correlation between the stock market and cryptocurrencies but there is one big difference, we have yet to see how cryptocurrencies perform under duress in a down market so it is not possible to predict how far the cryptocurrency correction could be during an economic reset. On top of the correction risk, there is huge volatility in cryptocurrency with huge swings both ways.
Even with the factors above, the government has decided that cryptocurrencies should be counted as assets to help more people purchase houses and take money out of their houses. The million dollar question is how the government mortgage entities (Fannie/Freddie) count these assets in underwriting. Should they count them at their face value like a stock or should they discount them 50%, 70%, etc.. due to their volatility? How they are counted remains to be seen but it brings up an underlying question of risk.
As the government entities give borrowers credit for crypto assets what happens in a declining market. For example, it is very likely some cryptocurrency could become for all intensive purposes worthless as over 50% of all listed cryptocurrencies have failed, with a significant number of these failures concentrated in 2024 and early 2025.
Remember, you, the taxpayer is ultimately on the hook for losses, so expanding the risk level of Fannie/Freddie could end up badly for both borrowers and ultimately taxpayers.
Will this directive on cryptocurrencies radically alter real estate?
“Blockchain and cryptocurrency really has the ability to change every aspect of real estate, from titles, to lending, to the brokerage itself,” said Jim Merrion, a Boulder real estate agent with Coldwell Banker. (Daily Camera). Is this true? Is cryptocurrency really going to change real estate? Should you accept bitcoin or another cryptocurrency? What do you need to know?
Before focusing on how cryptocurrency will “change every aspect of real estate” it is important to discuss what is a currency and how bitcoin and other cryptocurrencies fit into the economy.
What is currency?
First, it is important to define what a currency is. Currency in its most basic form is a system of money in general use in a particular country. Furthermore, for a currency to be widely accepted the value of the currency must be relatively stable. For example, a dollar today is worth a dollar tomorrow. Therefore, many emerging economies exchange for dollars to ensure the “buying power” of the currency.
What is cryptocurrency?
“a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.” Bitcoin is one type of cryptocurrency.
Is this a misnomer to classify bitcoin and others as currency?
Yes, values of bitcoin and other cryptocurrencies have recently had wild swings in value. One-day bitcoin might be worth 30% less or more than it was the day before. Traditional stable currencies do not have wild swings in value. The commodity future trading commission classified bitcoin as a “commodity”.
The problem with cryptocurrency?
The headline says it all: Crypto wipeout deepens to $640 billion as Ether leads the decline (Bloomberg). Ether the second largest cryptocurrency slumped 10% in one day. What happens if you were transacting a sale on 3-million-dollar commercial property. You exchanged your cryptocurrency in the morning and by the end of the day, the “currency” was worth $300,000 less? Who eats this loss? Why would a seller/payment recipient take the risk? What if the change happened during the transaction? For example, you are sitting in the closing and check your phone and see that the value of the crypto is falling (or rising). Long and short, in its current state cryptocurrency is unlikely to catch on due to the volatility in value and resulting risk to sellers/payment recipients.
Cryptocurrency and Blockchain are different
Blockchain is basically a way to transact business. It is a verifiable ledger system that is encrypted.
By design, a blockchain is resistant to modification of the data. It is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way”.[7] For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication and validating new blocks.
A blockchain is a decentralized, distributed and public digital ledger that is used to record transactions across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks and the consensus of the network.[1][23] This allows the participants to verify and audit transactions inexpensively.[24] (Wikipedia)
Blockchain is a way to communicate in a secure method without an intermediary that is verifiable. Blockchain likely will likely be adopted in real estate transactions. For example, a title to a property could be converted to Blockchain that would allow quick access to the title history and ensure no errors. Will Blockchain eliminate title companies? This is highly unlikely as there are various items that will not be on the blockchain like an IRS lien, divorces, liens/judgements against property owner that are not on title, etc…
What should you do?
Although I don’t believe cryptocurrencies will be widely accepted anytime soon as currency, the technology behind a cryptocurrency, blockchain, will “alter” real estate. Blockchain should help “smooth” the real estate transaction and eliminate many errors. But, I don’t see bitcoin or blockchain technology drastically changing the real estate paradigm.
At Fairview we have made the decision not to accept cryptocurrencies at this point due to the wild gyrations in value. I also don’t feel in its present state that Bitcoin is a currency today. I don’t want to accept the risk of a payment being worth less within a day. Furthermore, what if Amazon tomorrow came out with its own currency flooding the market with a currency that is cheaper and more widely accepted than any of the traditional players today?
Furthermore, with the government sponsored entities now accepting cryptocurrency as an asset, the risk of mortgage defaults will be elevated. With over 50% of all currencies failing, it is unwise for the government to jump on the bandwagon as the downside risk drastically outweighs any upside risk. At the end of the day taxpayers are going to be left holding the bag when there is a reset in the market.
I would suggest you watch the emergence of blockchain technology but hold off on the cryptocurrency bandwagon for real estate. Definitely hang on to your greenbacks!
Resources/Additional Reading
- https://x.com/pulte/status/1937944964656152800
- https://www.cnbc.com/2025/06/25/trump-crypto-mortgage.html
- http://www.dailycamera.com/boulder-business/ci_32077505/bitcondo-is-cryptocurrency-future-real-estate
- https://en.wikipedia.org/wiki/Blockchain
- https://www.forbes.com/sites/forbesrealestatecouncil/2018/06/22/will-the-power-of-blockchain-mean-the-end-of-title-insurance-companies-in-20-years/#355e186342a2
- https://www.fairviewlending.com/will-there-be-a-recession-in-2025/
- https://www.fairviewlending.com/the-largest-buyer-of-mortgages-predicts-big-changes-to-house-prices/