FHFA Could Expose Homebuyers To Greater Counterparty Risk
The Federal Housing Finance Agency (FHFA) is exploring the inclusion of cryptocurrency in single-family mortgage risk assessments, potentially allowing long-term crypto holders to qualify for mortgages without liquidating their assets. The directive emphasizes the need for verifiability of digital assets rather than requiring them to be held on US-regulated exchanges. Self-custody of crypto is highlighted as a secure and transparent option, contrasting with the risks associated with centralized exchanges. A proposed framework should accommodate both self-custodied and custodial assets, apply valuation discounts for volatility, and ensure proper documentation of verification methods. Effective regulation must recognize the legitimacy of both custody models and promote education on decentralized technology to avoid outdated practices.
