Federal housing authorities in the United States are investigating the potential impact of cryptocurrencies on property loan transactions.
The U.S. banking sector is witnessing a significant shift as regulatory bodies are withdrawing their anti-crypto guidelines, encouraging financial institutions to offer Bitcoin services. This change could pave the way for Bitcoin to push further into the traditional financial market.
One of the key developments is the approval of Bitcoin spot ETFs, with large banks like JPMorgan starting to accept ETF shares as collateral for loans or including customers' crypto wealth in the creditworthiness calculation.
This shift towards cryptocurrencies has not gone unnoticed by key figures in the industry. Bill Pulte, the director of the Federal Housing Finance Agency (FHFA), made headlines in 2019 when he announced that he had bought 11 BTC. Pulte later announced that the regulatory body would examine the handling of cryptocurrencies in mortgage financing.
The FHFA, which supervises Fannie Mae, Freddie Mac, and the Federal Home Loan Banks - the main players in mortgage financing - is currently investigating the potential impact of owning cryptocurrencies on mortgage eligibility. According to a post by the Bitcoin Policy Institute (BPI), including Bitcoin as an appropriate asset for calculating collateral in mortgages could trigger an innovation boom.
Another promising approach is the Bitcoin lending model, proposed by Michael Saylor, the founder of the "Bitcoin Treasury Company" Strategy. This model takes into account the loan term, collateral, Bitcoin price, Bitcoin volatility, and Bitcoin yield assumption to determine the statistical Bitcoin risk and Bitcoin lending spreads.
Meanwhile, in the corporate world, MicroStrategy, the largest corporate holder of Bitcoin, is currently issuing preferred shares secured by the 592,345 BTC on its balance sheet and paying an annual dividend. Andrew Hohns, founder and CEO of asset manager Newmarket Capital, uses part of the loan amount for a property to invest in Bitcoin for additional security.
The integration of Bitcoin into the bond and real estate markets is crucial for further Bitcoin adoption, with Hohns, together with Matthew Pines, managing director of BPI, also presenting the concept of BitBonds, which could help the USA reduce the interest burden of their debt and increase the Bitcoin reserve created by Trump's decree.
However, the FHFA currently does not support the integration of cryptocurrencies into mortgage financing due to concerns about volatility, regulatory uncertainty, and risks to the stability of the housing finance system. It is likely that in the future, the value of held Bitcoin or other cryptocurrencies will affect the creditworthiness of borrowers.
Tristan, the editor-in-chief at Blocktrainer.de, has been actively involved with Bitcoin since 2020 and has journalistic experience outside the Bitcoin space. This article aims to provide a clear and straightforward overview of the current developments in the intersection of Bitcoin and traditional finance, without adding opinions or unrelated information.
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