Mortgage Recognition of Bitcoin Comes with Strings Attached | US Crypto News

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Welcome to the US Crypto News Morning Briefing—your essential rundown of the most important developments in crypto for the day ahead.

Grab a coffee as the lines between Bitcoin (BTC) and traditional finance (TradFi) blur unexpectedly. For the first time, US mortgage giants Fannie Mae and Freddie Mac are preparing to accept Bitcoin as an asset in mortgage applications, but there’s a catch!

Crypto News of the Day: Bitcoin’s Mortgage Use Marred by Custody Restrictions

In a recent US Crypto News publication, BeInCrypto reported that the US housing regulator, FHFA, is exploring using crypto as collateral for mortgages.

The FHFA’s consideration of crypto holdings stored on US-regulated exchanges for mortgage loan eligibility, without requiring conversion to USD, signals a potential shift in housing credit models.

While this sounds like a win for crypto, experts warn that this milestone may come with strings attached.

“It looks like bitcoin held in self-custody will NOT count as an asset for consideration on home loans. This is a mistake Pulte; self-custody is fundamentally aligned w/American values. It’s trivial to prove ownership of BTC in self-custody,” wrote self-custody expert Nick Neuman.

Swan, which helps high-net-worth Bitcoiners with advanced custody, estate planning, and concierge onboarding, echoes the sentiment.

The Bitcoin financial services firm sees the breakthrough as a double-edged sword. Only Bitcoin held on regulated US custodial platforms currently qualifies.

“Bitcoin is being added to the mortgage system. That’s a win, but don’t let it fool you. If your Bitcoin isn’t custodied in a way the state can see, it still “doesn’t exist,” wrote Swan in a post.

This means that cold storage and multisig wallets, among other sovereign custody methods, remain invisible to the mortgage system.

The distinction highlights a larger debate unfolding at the intersection of crypto (DeFi) and TradFi: Who controls the keys?

For now, the mortgage system is leaning into familiarity, only recognizing assets that reside within the regulated banking perimeter. That means Bitcoin held on centralized, state-visible platforms like Coinbase exchange can be used to qualify for a home loan.

However, if it is stored privately in a hardware wallet or distributed via a multisig setup, it will not count, at least not yet.

“This isn’t about adoption vs. resistance. It’s about adoption with conditions. You can play— …but only if your Bitcoin plays by their rules. Rules designed for control,” Swan added.

The policy shift represents what Swan calls “phase two” of the legacy system’s approach to disruptive technologies. First, it ignores them, then it invites them in, but on its terms. The final phase, they warn, could involve penalizing users who do not comply.

Opportunity For Bitcoiners Who Understand the Terrain

Still, Swan sees an opportunity for Bitcoiners who understand the terrain. The financial services company urges crypto investors to front-run the trap by holding Bitcoin and leveraging TradFi’s rails without abandoning self-custody or the principles of decentralization.

Nevertheless, while it is currently excluded from mortgage underwriting, Swan believes that growing adoption will eventually force lenders to consider these forms of ownership as legitimate financial collateral.

“As adoption deepens, pressure will mount for lenders to recognize properly held Bitcoin—not just coins on an exchange…Eventually, the most secure form of money will unlock the most flexible capital,” Swan added.

Until then, Bitcoiners must choose between financial inclusion and financial sovereignty, with Swan encouraging its clients not to accept that as a permanent tradeoff.

In a time of adoption-by-invitation, not all Bitcoin is seen as equal, and that matters.

Amid sentiment that they cannot seize a user’s Bitcoin if they default, it is worth noting that, given that the BTC is not collateral for the loan, there is no need to seize it.

Notably, Bitcoin just serves to prove one’s overall net worth to assess repayment risk in the event that one unexpectedly loses one’s job and, therefore, salary.