Ark Invest, a leading investment management firm led by Cathie Wood, has highlighted a pivotal development set to bridge the world of blockchain-based capital with the substantial U.S. mortgage market.
What Happened: According to Nick Grous, an associate portfolio manager at Ark Invest, the recent directive from the Federal Housing Finance Agency (FHFA) instructing Fannie Mae (OTC:FNMA) and Freddie Mac (OTC:FMCC) to consider cryptocurrency holdings, such as Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), for mortgage loan risk assessments marks “crypto's first step into U.S. housing: from wallets to mortgages.”
“This directive introduces a novel bridge between blockchain-based capital and the $12 trillion U.S. mortgage market,” Grous notes.
Looking at the potential scale, Grous references iEmergent's 2024 Home Mortgage Disclosure Act (HMDA) data, which reported around “6 million mortgage originations in the U.S. last year, valued at $1.82 trillion.”
Based on an average loan size of approximately “$340,000,” Ark Invest’s analysis suggests that “if just 5% of mortgage borrowers included crypto-based assets in their applications, ~305,000 would qualify for a mortgage in this new framework—supporting $100 billion in originations.”
He further projects that “each additional percentage point of adoption would increase mortgage loan volume by ~$20 billion.”
This regulatory development, according to Ark Invest, “aligns with ARK's thesis that crypto will reshape legacy financial systems with greater transparency, automation, and interoperability.”
Why It Matters: The FHFA’s directive, issued last week, represents a significant shift.
It allows for the inclusion of cryptocurrency holdings, specifically “only those held on U.S.-regulated centralized exchanges,” as assets in single-family mortgage loan risk assessments.
Crucially, this directive “does not require converting crypto to U.S. dollars and does not include crypto held in self-custodied wallets.”
It also mandates “risk controls, like accounting for crypto market volatility and limiting how much crypto can count toward reserves,” signaling a cautious yet forward-looking approach to integration.
Last week, Strategy Inc.‘s (NASDAQ:MSTR) Michael Saylor stepped forward to offer Strategy’s (formerly MicroStrategy) Bitcoin Credit Model to support the initiative.
Meanwhile, the Bitcoin Policy Institute hails this as a potential game-changer, stating that a tweak to Fannie Mae’s Selling Guide to recognize Bitcoin as collateral could unlock homeownership for millions, aligning with Donald Trump’s vision to make the U.S. the “Bitcoin Capital of the planet.”
Price Action: Fannie Mae shares ended 1.95% lower on Monday. It has risen by 177.33% on a year-to-date basis and 553.42% over the past year.
On the other hand, Freddie Mac declined 1.55% on Monday, and it has risen by 144.51% on a year-to-date basis and 505.88% over the past year.
After hitting fresh records on Friday and Monday, on Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, were lower in premarket. The SPY was down 0.18% at $616.74, while the QQQ declined 0.26% to $550.18, according to Benzinga Pro data.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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