Crypto Debate Heats Up As US Lawmakers Question FHFA Home Loan Policy

A new political debate is unfolding as a group of Senate Democrats has officially raised concerns about the growing intersection of crypto and the US housing market. The lawmakers sent a letter to William Pulte, Director of the Federal Housing Finance Agency (FHFA), challenging his recent directive that asks Fannie Mae and Freddie Mac to submit proposals for including unconverted cryptocurrency assets in mortgage underwriting decisions. This marks a potential shift in how digital assets could influence loan eligibility and financial risk assessments.

The senators—led by Jeff Merkley, Elizabeth Warren, and Bernie Sanders—warn that the inclusion of volatile and largely unregulated crypto holdings in underwriting processes may pose significant dangers to consumers and the broader housing market. They argue the directive lacks sufficient detail on how these proposals will be developed, evaluated, or regulated, creating uncertainty and possible systemic risks.

Under current rules, only converted crypto with proper documentation can be considered in mortgage applications. Including unconverted assets, critics say, opens the door to volatility, liquidity risks, and potential loss from scams or hacks. With Pulte also chairing the boards of Fannie Mae and Freddie Mac, questions around conflict of interest and procedural oversight are intensifying.

Senators Raise Red Flags Over Crypto In Mortgage Underwriting

In their sharply worded letter, the senators highlighted that current federal guidelines prohibit the use of unconverted cryptocurrency in mortgage underwriting. “Expanding underwriting criteria to include the consideration of unconverted cryptocurrency assets could pose risks to the stability of the housing market and the financial system,” the senators warned. They argue that crypto’s volatility, lack of regulatory clarity, and limited liquidity—especially during market downturns—could amplify risks for both lenders and borrowers. As the letter notes, “a borrower using crypto faces an increased risk that they may not be able to exit a crypto position and convert to cash at a price that would allow them to buffer against risk of mortgage default.”

The lawmakers argue that the recent directive from FHFA Director William Pulte could disrupt the financial system’s stability by enabling lenders to consider unconverted crypto assets—assets that are volatile, hard to value in real-time, and prone to liquidity constraints.

Beyond financial concerns, the senators also questioned potential conflicts of interest between Pulte, the Trump Administration, and the cryptocurrency industry, particularly regarding his dual role as FHFA Director and Chair of the Enterprises’ Boards. These overlapping positions could allow for outsized influence in approving policies that lack independent scrutiny.

As the US inches closer to integrating this asset class into traditional financial frameworks, this letter signals intensifying scrutiny from lawmakers. With institutional adoption growing and regulatory frameworks evolving, the coming weeks will be crucial for determining how the US government balances innovation with systemic financial stability.

Total Market Cap Approaches $4 Trillion

The weekly chart of the total crypto market cap reveals a powerful uptrend, with the market currently sitting at $3.89 trillion—just shy of the psychological $4 trillion mark. After a steep rally that began in late 2023, the market has continued to push higher with strong bullish momentum, confirming a breakout from its previous consolidation phase.

All major moving averages (50, 100, and 200) are trending upward, and the price remains well above them. This suggests a healthy structure in both short- and long-term perspectives. The 50-week SMA at $2.95 trillion is now acting as solid macro support, underlining the strength of the current cycle.

Notably, this level also aligns with the prior all-time high region from early 2022, now flipped into support—an important technical signal in bullish cycles. Volume is increasing in the up weeks, confirming buying interest as the market gains traction.

Featured image from Dall-E, chart from TradingView