21st Century Mortgage Act to Permit Crypto Mortgages
US Senator Cynthia Lummis has introduced the 21st Century Mortgage Act to integrate digital assets into home loan assessments and enable a crypto mortgage framework for Fannie Mae and Freddie Mac. The bill would allow borrowers to count cryptocurrency holdings, such as Bitcoin (BTC) and Ethereum (ETH), as reserves without converting them to USD. It formalises FHFA guidance, requiring lenders to include tokens in risk assessments and adjust valuations to mitigate volatility. This crypto mortgage approach avoids forced selling and preserves tax positions. Standard income, credit and AML requirements remain in place. Critics led by Senator Elizabeth Warren warn of volatility risks and systemic exposure. If passed, the measure could unlock new borrowing power for the 21% of US adults holding digital assets and signal deeper integration of crypto into mainstream finance.
Bullish
This legislative move is likely bullish for bitcoin and ethereum as it creates a new use case by allowing crypto holdings as mortgage collateral. In the short term, traders may see increased demand for BTC and ETH as investors reposition assets to qualify for loans. Over the longer term, formalising crypto mortgage frameworks could strengthen market confidence, boost institutional interest and drive sustained growth in token usage and liquidity.