Senate Democrats Voice Concerns Over Cryptocurrency’s Role in US Housing Market
In a significant political development, a faction of Senate Democrats has expressed apprehensions regarding the increasing intersection of cryptocurrencies and the US housing market. These lawmakers have communicated their concerns to William Pulte, Director of the Federal Housing Finance Agency (FHFA), by sending a formal letter. This correspondence challenges Pulte’s recent directive urging Fannie Mae and Freddie Mac to propose methods for incorporating unconverted cryptocurrency assets into mortgage underwriting processes. Such a directive indicates a potential transformation in how digital assets may influence loan eligibility and assess financial risks.
Lawmakers Warn Against Potential Risks of Crypto in Mortgage Processes
Leading this initiative are Senators Jeff Merkley, Elizabeth Warren, and Bernie Sanders, who caution that integrating volatile, largely unregulated crypto holdings into underwriting procedures could endanger consumers and the broader housing market. They argue that the directive lacks comprehensive details on the development, evaluation, or regulation of these proposals, creating uncertainty and potential systemic risks. Under existing rules, only converted cryptocurrencies with appropriate documentation are considered in mortgage applications. Critics suggest that including unconverted assets could introduce volatility, liquidity risks, and potential losses from scams or cyber-attacks. With Pulte also serving as the chair of the boards of Fannie Mae and Freddie Mac, concerns about conflicts of interest and procedural oversight are intensifying.
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Senators Express Concerns Over Potential Market Instability
In their pointed correspondence, the senators underscore that current federal guidelines restrict the use of unconverted cryptocurrency in mortgage underwriting. “Expanding underwriting criteria to include unconverted cryptocurrency assets could jeopardize the stability of the housing market and the financial system,” they caution. The lawmakers highlight that the volatility, limited regulatory clarity, and restricted liquidity of cryptocurrencies—especially during market downturns—could pose amplified risks for both lenders and borrowers. “A borrower using crypto faces an increased risk of being unable to liquidate their crypto holdings and convert them to cash at prices that would mitigate mortgage default risks,” they note.
The senators further assert that FHFA Director William Pulte’s recent directive could undermine the financial system’s stability by allowing lenders to consider unconverted crypto assets, which are volatile, challenging to value in real-time, and prone to liquidity constraints. Beyond financial concerns, questions about potential conflicts of interest involving Pulte and the cryptocurrency industry have emerged, given his dual role as FHFA Director and Chair of the Enterprises’ Boards. These overlapping responsibilities might grant Pulte significant influence over policy approvals lacking independent scrutiny.
Scrutiny Intensifies as US Moves Towards Crypto Integration
As the United States edges closer to integrating cryptocurrencies within traditional financial systems, the senators’ letter indicates heightened scrutiny from lawmakers. With increasing institutional adoption and evolving regulatory frameworks, the upcoming weeks will be crucial in determining how the US government can balance innovation with systemic financial stability.
Crypto Market Cap Nears $4 Trillion Milestone
The total cryptocurrency market capitalization is approaching the significant $4 trillion mark, with the current market standing at $3.89 trillion. This follows a robust uptrend that began in late 2023, continuing to rise with strong bullish momentum, confirming a breakout from its prior consolidation phase.
All major moving averages, including the 50, 100, and 200-week averages, are trending upwards, with the market price remaining well above them. This suggests a healthy market structure from both short- and long-term perspectives. The 50-week simple moving average at $2.95 trillion now serves as a solid macro support, reinforcing the current cycle’s strength. Notably, this level coincides with the former all-time high from early 2022, now flipped into support—an important technical signal in bullish cycles. Increasing volume during up weeks confirms growing buying interest as the market gains traction.
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