"Encryption Mortgage" emerges: What big game is Washington playing next?

Written by: Oliver, Mars Finance

On Wednesday local time, a social media post opened a door to the unknown in the American real estate finance sector. Federal Housing Finance Agency (FHFA) Director William Pulte personally intervened, instructing the two major "cornerstones" of the U.S. housing mortgage market — Fannie Mae and Freddie Mac — to prepare for the acceptance of cryptocurrency as collateral. This news came without any lengthy buildup through official press releases, presenting a grand vision in a strikingly modern way: to transform the United States into the "world capital of cryptocurrency."

This is far more than just a policy adjustment; 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 valued at over $13 trillion. The market's nerves are instantly stimulated, and the painful memories of the 2008 financial tsunami are awakened once again. Is this an innovative remedy to solve the housing crisis, or is it recklessly cutting a new wound on an old scar that could trigger a systemic infection? To find the answer, we need to clear the fog and see the cards held by every player at the table.

Paving Stone: The Shift in Regulatory "Understanding"

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

At the core of the transformation is the systematic dismantling of past barriers. In early 2025, three major institutions—the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC)—joined forces to lift multiple restrictive guidelines previously imposed on banks engaging in cryptocurrency activities. These documents had been the "tightening spell" for traditional banks venturing into the crypto world. The official statement was "support for innovation," but the market's interpretation was more straightforward: the green light is on.

Following closely, the U.S. Securities and Exchange Commission (SEC) also dismantled another barrier by repealing the controversial Staff Accounting Bulletin No. 121 (SAB 121). This regulation had forced banks to classify customer-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 of the financial system accepting it as collateral. The regulatory authorities have built a smooth "highway" for crypto assets to move from the margins to the center with a set of coordinated measures.

In the center of the stage: the giant burdened with history

To understand the significance of this throttle, one must comprehend the roles of the two giants, Fannie Mae and Freddie Mac— as well as their less-than-glorious history during the 2008 crisis. As government-sponsored enterprises created by Congress, they injected lifeline-like 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 today: an institution born to "de-risk" is now instructing its regulated entities to embrace assets known for their high risks. This is akin to allowing a recently recovered patient to try a potent new drug with unknown ingredients. Under the strong leadership of the new director, DeMarco, the market's concerns are not unfounded.

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

Before the two giants were pushed to the table, a "niche" lending market serving cryptocurrency holders had already existed. Financial technology companies like Milo and Figure operate on a simple premise: borrowers provide collateral in the form of cryptocurrency assets that far exceed the loan amount in exchange for funds to purchase a home. The biggest risk in this model lies in the "Margin Call"; if the market crashes, and the borrower cannot top up their collateral, the collateral will be liquidated. The risk is strictly confined to this narrow scope between the lending parties.

However, once Fannie Mae and Freddie Mac entered the scene, a disturbingly familiar script began to unfold. The path of the 2008 crisis started with the packaging and spreading of risks. At that time, banks bundled a large number of poor-quality subprime loans into seemingly safe securities (MBS), sold globally with guarantees from 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, reselling them to Fannie Mae and Freddie Mac, which then package them into "Crypto Mortgage-Backed Securities" (CMBS), flowing to global pension funds, insurance companies, and investors with the implicit guarantee of the government. When the risks that originally belonged to individuals are magnified and injected into the entire financial system, the "negative feedback loop" warned by the Federal Reserve may be triggered. The FHFA's directive is attempting to connect this speculative game in a small circle with the nation's housing infrastructure, the stakes of which are self-evident.

Antidote or Poison: A Collision of Two Futures

Supporters and opponents of this policy envision completely different futures.

In one perspective, this is a "genius move" to solve the housing crisis in the United States. The data doesn't lie; nearly three-quarters of American families have been shut out by soaring housing prices. Meanwhile, a large group of cryptocurrency holders, primarily young people, is forming, sitting on vast digital wealth but equally 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 but cash-poor" individuals with their rigid demand for housing.

But from another perspective, this is merely a reappearance of the ghost of 2008. Economists like Nouriel Roubini and other critics have long denounced cryptocurrencies as "speculative bubbles 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 this approach will only stoke 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. Even more concerning is that, against the backdrop of an already tight housing supply, a significant influx of new purchasing power will almost inevitably drive up overall housing prices, creating new wealth gaps.

Unresolved dilemma

Purt's instruction was merely 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 perform real-time valuation of such 24/7 volatile assets? What will be the "haircuts" set for hedging risks?

Interestingly, amidst all the commotion, the two protagonists of the story—Fannie Mae and Freddie Mac—maintained a thought-provoking silence. This precisely confirms the top-down political driving nature of the directive. They found themselves passively caught up in an "arms race" of technology and risk management, needing to develop a risk control system that could compete with agile fintech companies in a short period of time. This is a significant 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 core sectors of the U.S. economy, has been officially designated as the next battleground for the integration of digital assets and the traditional world.

This move elevates the role of cryptocurrency from a speculative bystander to a potential cornerstone for building wealth and realizing the American dream. Whether the future brings prosperity or disaster, whether it is a giant leap towards financial inclusion or a replay of systemic instability, will entirely depend on the execution plans that are about to be devised, filled with devilish details. This time, the whole world will be watching to see if the United States learns from the lessons of 2008. The story has just begun.