Crypto in Mortgage Risk Assessments? FHFA’s Move Is Big—But Let’s Not Get It Wrong

[tradelikepro]

The Federal Housing Finance Agency (FHFA) recently issued a directive asking Fannie Mae and Freddie Mac to explore how cryptocurrency might factor into single-family mortgage risk assessments. For crypto holders, this could be a major step toward financial inclusion—and it’s long overdue.

If implemented thoughtfully, it could allow long-term holders to use crypto in mortgage applications without having to sell their assets and trigger tax events.

But if this is going to work, we need to be clear on one thing: self-custody must be treated as legitimate.
🧾 What the FHFA Directive Actually Says

Some have misunderstood the directive as requiring crypto to be stored on a U.S.-regulated exchange to count.

Here’s what the language really says:

“Digital assets... must be capable of being evidenced and stored on a US-regulated, centralized exchange subject to all applicable laws.”

That key phrase—"capable of being stored"—does not ban self-custody. It means the assets must be verifiable and manageable under U.S. legal standards, not that they have to be held in a specific place.

Verifiability is the standard—not a particular custody model.
The Case for Self-Custody

Let’s be real: self-custody isn’t fringe—it’s foundational to crypto.

In many cases, it’s safer than leaving your assets on centralized platforms. History has already shown us what happens when custodians fail: Mt. Gox, FTX, Celsius… the list goes on.

Self-custody:

Offers transparent, on-chain records to prove ownership

Allows for auditability and verification via third-party tools

Reduces counterparty risk by eliminating centralized failure points

Uses cold storage and hardware wallets to strengthen security

If crypto held in self-custody is excluded from mortgage underwriting simply because it isn’t parked on an exchange, we risk punishing people for using crypto the right way.
🧠 What a Smart Framework Should Look Like

Here’s a better path forward:

Allow both self-custodied and custodial holdings, as long as they’re verifiable and liquid

Apply valuation haircuts to account for volatility—just like we already do with stocks or foreign currencies

Use a tiered reserve system to limit overexposure to crypto in mortgage risk models

Require clear documentation on how assets are valued and verified

This would bring crypto in line with how other non-traditional assets are treated in underwriting. No need for special treatment—just fair treatment.
Don’t Force Crypto into Old Boxes

This is a chance to modernize the mortgage system. But we must avoid the trap of trying to make crypto act like traditional finance just to fit it into outdated models.

We don’t need to flatten decentralization to make it legible. We just need smart verification frameworks that account for how the technology works.

Crypto is already changing how people store wealth, earn income, and build trustless systems. Pretending that all users rely on centralized intermediaries is out of touch with how the ecosystem actually functions.
🧾 TL;DR

FHFA wants to explore crypto in mortgage assessments—a good move

The directive does not ban self-custody; it calls for verifiability

Self-custody is secure, auditable, and legitimate

A strong framework should focus on verifiability, not venue

Don’t force crypto into legacy boxes—modern tools exist to verify ownership without centralized custody

Final Thought

This isn’t just about mortgage policy. It’s about getting crypto regulation right.

From taxes to compliance to lending, we need frameworks that reflect how crypto actually works—both centralized and decentralized.

Otherwise, we’ll keep leaving large parts of the industry in regulatory limbo… and punish the people doing things securely and responsibly.

Let’s get this one right.

[Nahid10]

It’s advisory, not immediate policy: Fannie Mae and Freddie Mac have been asked to prepare proposals—but actual underwriting changes still require board approval and agency sign-off ledgerinsights.com+15Consumer Financial Services Review+15VitalLaw+15 Innovative Mortgage Brokers+1HousingWire+1 .Limited to reserves, not income: Crypto assets are being considered only for reserves (assets held post-closing)—not used as income for debt-to-income ratio calculations.