New Senate bill seeks to recognize crypto as mortgage collateral

US Senator Cynthia Lummis of Wyoming has introduced a groundbreaking bill that could reshape how Americans finance their homes. Titled the 21st Century Mortgage Act, the bill proposes that cryptocurrency be recognized as a legitimate asset for mortgage applications, allowing digital asset holders to use their crypto as collateral when applying for single-family loans.

This legislative action comes after the US Federal Housing Finance Agency (FHFA) issued a June directive advising federal mortgage agencies to explore crypto assets in reviewing mortgage applications. Lummis’s bill would enshrine this guidance into law, officially incorporating digital assets into the American housing finance system.

Lummis said on Tuesday that the bill adopts a modern approach to building wealth and highlighted that, even for those who do not invest in digital assets, they likely know someone who does. She added that the bill aims to promote economic inclusion and reflects current trends in accumulating wealth, particularly among younger investors.

Lummis cited a recent US Census Bureau report that found, as of the first quarter of 2025, just 36% of Americans aged 35 and younger own homes compared with older age groups. She contends that permitting crypto to count as mortgage collateral could carve out new avenues to homeownership for this digitally savvy segment of Americans.

If approved, borrowers would not be required to convert their crypto holdings into fiat currency. Instead, the value of the crypto assets could be directly valued or considered when assessing the mortgage application. This could enable buyers to not risk out on potential asset growth by selling their tokens to be eligible for a home loan.

Democrats question crypto risk in housing loans

That logic does not go over well with some lawmakers, however. Senate Democrats push back on proposed implementation of digital assets in the US housing market. They say cryptocurrency is still far too volatile, illiquid, and unpredictable for it to be considered stable collateral for long-term loans, such as mortgage payments.

In a letter dated July 24, a group of Senate Democrats expressed concern to FHFA Director William Pulte about the potential financial risks of the policy. They warned that, even as the crypto market matures, ongoing volatility and liquidity issues could make it difficult for borrowers to exit their crypto positions and convert assets into cash at prices sufficient to support their mortgage obligations.

The members requested a full risk assessment, recommending that the FHFA consider the broader implications of digital assets in the traditional housing finance system. They also cautioned that crypto-based mortgage lending could inadvertently drive up the price of homes, exacerbate speculation in the market, or destabilize parts of the economy if the values of cryptocurrencies unexpectedly plummet.

Congress pushes forward crypto mortgage bills

Other crypto-centric bills are currently making their way through Congress, as part of a larger trend toward regulating and mainstreaming digital assets in US financial law.

Ms. Lummis also sponsored a separate Republican bill to establish a full market structure for digital assets. That bill carves out SEC and CFTC roles and offers regulatory clarity for crypto exchanges, token issuers, and investors.

Another bill gaining traction — especially among conservatives — would prohibit the Federal Reserve from creating a central bank digital currency (CBDC) based on privacy and government overreach concerns. The House passed this bill and may come up in the Senate in the fall, after the August recess.

The House version of Lummis’ mortgage bill, which is also called the American Homeowner Crypto Modernization Act, was introduced on July 14 by Representative Nancy Mace. Mace’s legislation requires mortgage lenders to consider digital assets in their underwriting if borrowers have assets in crypto brokerage accounts.

Global events are stoking momentum as well. In July, Australian company Block Earner said it would offer Bitcoin-backed mortgages. The rollout was facilitated by a legal victory after the Federal Court of Australia decided that the firm’s crypto loan products should not be regarded as financial products under the current legislation. 

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