"Encryption mortgage" emerges: What big game is Washington playing?

This policy aims to alleviate the housing crisis, but also raises concerns about systemic risks, potentially replicating the path of the 2008 financial crisis.

Written by: Oliver, Mars Finance

On Wednesday local time, a social media post opened a door to the unknown in the U.S. real estate finance sector. The Director of the Federal Housing Finance Agency (FHFA), William Pulte, personally intervened, instructing the two "cornerstones" of the U.S. housing mortgage market—Fannie Mae and Freddie Mac—to prepare for accepting cryptocurrency as collateral. This news was not preceded by any lengthy official press release, but rather presented in a strikingly contemporary manner, bringing a grand vision to the forefront: to make the United States the "world's cryptocurrency capital."

This is far more than just a policy tweak; it resembles a gamble that crosses the financial Rubicon. An asset class known for its extreme volatility and high speculation is about to be grafted onto the cornerstone of the U.S. economy—a massive market worth over $13 trillion. The nerves of the market are instantly stirred, and the painful memories of the 2008 financial tsunami are reawakened. Is this an innovative remedy for the housing crisis, or is it recklessly opening a new wound that could trigger a systemic infection on old scars? To find the answer, we need to clear the fog and see the hidden cards of each player at the table.

Stepping Stone: The Shift in Regulatory "Understanding"

Powell's instruction seems sudden, but it is actually the first step on a carefully cleared runway, pressing down the accelerator. Prior to this, the regulatory winds in Washington had already quietly shifted. A synchronized "unfreezing" action is paving the way for this high-stakes gamble.

At the core of the transformation is the systematic dismantling of past barriers. At the beginning of 2025, the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) joined forces to revoke several restrictive guidelines that previously limited banks' involvement in cryptocurrency activities. These documents had served as the "tightening spell" preventing traditional banks from entering the crypto world. The official statement is "supporting innovation," but the market's interpretation is more straightforward: the green light has been turned on.

Following closely, the U.S. Securities and Exchange Commission (SEC) also dismantled another high wall by abolishing the controversial Staff Accounting Bulletin No. 121 (SAB 121). This regulation had forced banks to account for client-held crypto assets as their own liabilities, significantly increasing the cost of providing custody services. With this stumbling block removed, the door for banks to enter the crypto custody space on a large scale has been completely opened.

This series of seemingly independent actions connects to form a clear path: from allowing custody, to encouraging participation, and now to the core acceptance of the financial system recognizing it as collateral. The regulatory authorities have constructed an unobstructed "highway" for crypto assets to move from the periphery to the center with a set of combined measures.

Center Stage: The Giant Carrying History

To understand the weight of this throttle, one must comprehend the roles of Fannie Mae and Freddie Mac—two behemoths—and their not-so-glorious history during the 2008 crisis. As government-sponsored enterprises created by Congress, they injected lifeline liquidity into the entire market by purchasing and guaranteeing mortgages, with their underwriting standards being the "golden rule" of the industry.

The FHFA, which supervises these two giants, was born out of the 2008 crisis, and its core mission is to prevent history from repeating itself. This creates the most dramatic contradiction of the present: an institution born to "de-risk" is now instructing its regulatory subjects to embrace assets known for high risk. This is akin to asking a recently recovered patient to try a potent new drug with unknown ingredients. Under the strong leadership of the new director, Pulte, the market's concerns are not unfounded.

Domino Effect: How Risks Evolve from Individual Bets to Systemic Storms

Before the two giants were brought to the table, a "niche" lending market serving cryptocurrency holders had already existed. Financial technology companies like Milo and Figure have a simple approach: borrowers put up collateral in the form of cryptocurrency assets that far exceed the loan amount to obtain home purchase funds. The biggest risk in this model lies in the "Margin Call"; once the market plummets, if the borrower cannot provide additional collateral, the collateral will be liquidated. The risk is strictly confined within this narrow range between the lending parties.

However, once Fannie Mae and Freddie Mac enter the scene, a disturbingly familiar script begins to unfold. The path of the 2008 crisis started with the packaging and spreading of risk. Back then, banks bundled a large number of subprime loans of poor quality into seemingly safe securities (MBS), selling them globally with the backing of the two giants, ultimately leaving no one aware of the true nature of the risks until the entire edifice collapsed.

Now, we can easily imagine a similar scene: banks issuing loans backed by crypto assets, then selling them to Fannie Mae and Freddie Mac, which then bundle them into "Crypto Mortgage-Backed Securities" (CMBS), flowing to global pension funds, insurance companies, and investors, bolstered by the government's implicit guarantee. When this risk, originally belonging to individuals, is magnified and injected into the entire financial system, the "negative feedback loop" warned by the Federal Reserve may be triggered. The directive from FHFA is attempting to connect this speculative game in a small circle to the national housing infrastructure, with stakes that are self-evident.

Antidote or Poison: The Collision of Two Futures

Supporters and opponents of this policy depict entirely different futures.

In one perspective, this is a "genius move" to solve the housing crisis in the United States. The data does not lie; nearly three-quarters of American families have been shut out by high housing prices. At the same time, a large group of cryptocurrency holders, primarily young people, is forming. They possess substantial digital wealth but are also facing the dilemma of "difficulty in getting on board." The core of this policy is to build a bridge connecting this group of "asset-rich, cash-poor" individuals with their rigid demand for housing.

However, from another perspective, this is nothing more than a reappearance of the specter of 2008. Critics like economist Nouriel Roubini have long dismissed cryptocurrencies as "a speculative bubble with no intrinsic value." An official from the Department of Housing and Urban Development (HUD) bluntly stated, "This is no different from introducing another unregulated security into the housing market, as if 2008 never happened." They believe that this approach will only fuel the real estate market during a bull market, while in a bear market, forced liquidations will simultaneously hit both the crypto market and the real estate market, creating a deadly downward spiral. More concerningly, against the backdrop of already tight housing supply, the influx of a large amount of new purchasing power will almost inevitably drive up overall housing prices, creating a new wealth gap.

Unresolved Dilemma

Pulte's instructions merely fired the starting gun; the real challenge lies in the countless details before the finish line. A series of key questions remain unresolved: Which cryptocurrencies qualify as collateral? How to value this 24/7 volatile asset in real time? What will be the "haircuts" set for hedging risks?

Interestingly, amidst all the commotion, the two main characters of the story—Fannie Mae and Freddie Mac—maintain a thought-provoking silence. This precisely confirms the top-down political drive of the directive. They find themselves passively caught up in an arms race of technology and risk management, needing to develop risk control systems that can compete with agile fintech companies in a short period of time. This is a huge challenge for any large bureaucratic institution.

The FHFA's directive is undoubtedly a watershed moment. It marks the convergence of a clear political agenda, a newly relaxed regulatory environment, and the immense inertia of the U.S. housing finance system. The real estate market, one of the most vital sectors of the U.S. economy, has officially been designated as the next battleground for the integration of digital assets and the traditional world.

This move elevates the role of cryptocurrencies from being speculative bystanders to a potential cornerstone for building wealth and achieving the American Dream. Whether the future brings fortune or misfortune, whether it is a giant leap towards financial inclusion or a reenactment of systemic instability, will entirely depend on the devilishly detailed execution plans that are about to be formulated. This time, the whole world will be watching to see if the United States learns from the lessons of 2008. The story has only just begun.