- Five U.S. Senate Democrats raised concerns about including cryptocurrency holdings in mortgage approvals.
- The senators sent a letter to Federal Housing Finance Agency (FHFA) Director William Pulte requesting details on his plan.
- Pulte ordered Fannie Mae and Freddie Mac to explore proposals for considering crypto assets in single-family loans.
- The lawmakers cited risks related to volatility, liquidity, and conflicts of interest, including personal crypto holdings.
- The senators requested clarity and documentation on the decision-making process by August 7.
Five U.S. Senate Democrats have asked the head of the nation’s housing finance agency to explain why he wants to let cryptocurrency holdings count toward mortgage approvals. The group, led by Senator Jeff Merkley, sent a letter on Friday to FHFA Director William Pulte requesting information on the risks and benefits of this approach.
The letter follows an order by Pulte last month, instructing mortgage firms Fannie Mae and Freddie Mac to craft proposals allowing crypto as part of risk assessments for single-family home loans, even if those assets are not converted into U.S. dollars first. According to the senators, the current rules do not allow any federally backed mortgage provider to consider crypto assets unless converted to cash.
In the letter, co-signed by Elizabeth Warren, Chris Van Hollen, Mazie Hirono, and Bernie Sanders, the senators expressed concern that the plan “could introduce unnecessary risks to consumers and pose serious safety and soundness concerns for the U.S. housing and financial markets.” They pointed out that cryptocurrencies are often volatile and can experience liquidity problems—meaning it may be hard for borrowers to quickly convert crypto to dollars, especially during market downturns.
The senators also highlighted risks from scams, cyber hacks, and theft, which could impact homeowners’ ability to repay loans. They warned about potential conflicts of interest, including ties between the Trump family and crypto businesses, as well as Pulte’s spouse reportedly holding up to $2 million in crypto assets. The letter claims Pulte’s directive was vague and lacked details about how proposals should be developed, evaluated, and approved.
The lawmakers requested answers to several questions by August 7, including a disclosure of communications related to the crypto directive and the process for avoiding conflicts of interest. The senators referenced a 2021 assessment by Fannie Mae, which found the use of crypto for mortgage processes to be the “least appealing application” of blockchain in the industry. They also connected their concerns to past financial failures, mentioning the 2023 banking crisis, which included incidents where banks failed due to risks related to crypto businesses.
For full details, the senators’ letter to Pulte is available on the U.S. Senate Committee on Banking, Housing, and Urban Affairs website.
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