The first step for Crypto Assets to enter the US housing market

Last week, the Federal Housing Finance Agency ( FHFA ) directed Fannie Mae and Freddie Mac to develop proposals to treat holdings of crypto assets (but only those held in regulated centralized exchanges in the U.S.) as assets in the risk assessment of single-family residential mortgages. The directive does not require converting crypto assets into U.S. dollars, nor does it include crypto assets in self-hosted wallets. The directive also mandates the implementation of risk control measures, such as considering the volatility of the crypto asset market and limiting the amount of crypto assets that can be counted as reserves.

This directive builds a brand new bridge between the blockchain-based capital and the scale of the $12 trillion U.S. mortgage market. If the Federal Housing Finance Agency finalizes this rule, setting a precedent for broader applications of mortgages and Crypto Assets, then blockchain-based balance sheets could significantly impact the mortgage market by simplifying underwriting processes, reducing transaction costs, and enabling token-linked mortgage instruments.

According to a Harris poll commissioned by CryptoSlate, 21% of American adults own digital assets. Among the approximately 55 million individuals with crypto assets, 6 million hold an average of over $100,000 in assets. Given the wealth accumulated by individuals on-chain, the impact of crypto assets on the credit market could become significant.

According to iEmergent's 2024 Home Mortgage Disclosure Act (HMDA) data, the number of mortgage loans issued in the United States last year was approximately 6 million, valued at $1.82 trillion, which means the average loan size was about $340,000. Based on this calculation, if only 5% of mortgage borrowers include Crypto Assets in their applications, then under this new framework, approximately 305,000 people would qualify for a mortgage, thereby supporting a issuance scale of $100 billion. For every one percentage point increase in adoption, the mortgage amount would increase by approximately $20 billion.

Our approach is based solely on penetration rate × average transaction size, assuming that leverage multiples or trading speeds do not change, thus the upward potential may significantly increase. This regulatory development aligns with ARK's argument that crypto assets will reshape the traditional financial system with higher transparency, automation, and interoperability.