Key Takeaways
- Senator Cynthia Lummis introduces a bill to include bitcoin in mortgage eligibility assessments.
- Fannie Mae and Freddie Mac would be required to consider digital assets without forcing conversion to dollars.
- The legislation could set a precedent for federal recognition of bitcoin in traditional lending.
U.S. Senator Cynthia Lummis (R-WY) has introduced the 21st Century Mortgage Act, a bill that would require government-sponsored enterprises to recognize digital assets, such as bitcoin, when assessing eligibility for single-family home loans.
Bill aims to modernize mortgage assessments
The proposed legislation directs Fannie Mae and Freddie Mac to include assets recorded on a cryptographically-secured distributed ledger in their mortgage risk assessments, fundamentally changing the way single-family mortgage applications are evaluated.
The bill also prohibits forcing the conversion of digital assets into dollars, acknowledging the unique nature of digital wealth.
Supporting young Americans and innovation
Senator Lummis emphasized the bill’s focus on youth and innovation, stating this week:
“This legislation embraces an innovative path to wealth-building, keeping in mind the growing number of young Americans who possess digital assets. We’re living in a digital age, and rather than punishing innovation, government agencies must evolve to meet the needs of a modern, forward-thinking generation.”
Impact on lenders and the mortgage industry
If enacted, the bill would mark the first federal recognition of digital assets in conventional lending, potentially affecting millions of mortgage applications.
The new Fannie Mae and Freddie Mac guidelines could set precedents for how lenders across the industry evaluate bitcoin holdings and other digital assets.
Bitcoin as collateral gains traction
Already, several institutions offer bitcoin-backed lending.
For instance, JPMorgan is moving to accept bitcoin ETFs as collateral for loans. Meanwhile, Circle’s USDC stablecoin will be eligible collateral for futures trading next year.
