- Lummis bill could allow bitcoin loan in mortgages.
- Borrowers can use crypto without converting to cash.
- Wider acceptance of bitcoin loans across the U.S.
Senator Cynthia Lummis has sponsored the 21st Century Mortgage Act, a bill that aims to get the housing sector into the 21st century by providing legal status to Bitcoin and other cryptos in loan qualification processes. The move can potentially reshape the view of bitcoin loans and other crypto-backed financial products within the U.S. mortgage market.
If passed into law, the bill would compel government-sponsored home loan agencies such as Fannie Mae and Freddie Mac to account for cryptocurrency assets in determining the acceptability of mortgage applications for single-family homes. This would codify a recent directive by FHFA Director William Pulte calling federal agencies to adapt in order to keep up with the growing role of digital assets.
Bitcoin Loan by Senator
“We’re living in a digital age, and rather than punishing innovation, government agencies must evolve to meet the needs of a modern, forward-thinking generation,” said Senator Lummis when unveiling the legislation.
Other than the acknowledgement, the bill also safeguards holders of crypto. It would prohibit lenders from making borrowers sell Bitcoin or other currency to fiat currency to qualify for a mortgage. This would enable home buyers to utilize their bitcoin loan or digital asset holdings towards eligibility without giving up exposure on their investments.
A similar bill is pending in the U.S. House of Representatives, with trade visionaries like Cathie Wood and Michael Saylor endorsing the bill. Supporters believe that the allowance of crypto assets for mortgage eligibility will enhance adoption and bring flexibility to the financial ecosystem.
After the news, Bitcoin was trading at about $118,000, supported by an 8% rise in daily volume. Meanwhile, the broader markets were indeterminate, with XRP rising by about 3% and the world crypto market cap flat at $3.85 trillion, down only 0.5% for the day.
If the 21st Century Mortgage Act were to pass, it would pave the way for wider use of bitcoin loans and other cryptocurrency-backed loan products in the U.S. residential mortgage market.
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