Senator Lummis Introduces 21st Century Mortgage Act

TLDR

• Bill allows Bitcoin in mortgage assessments without dollar conversion.
• First federal effort to include digital assets in mortgage lending.
• Potentially expands homeownership for young Americans with digital wealth.

Senator Cynthia Lummis of Wyoming has introduced the 21st Century Mortgage Act, which seeks to incorporate digital assets like Bitcoin into home loan assessments. This bill would allow federal mortgage entities Fannie Mae and Freddie Mac to evaluate single-family home loans with Bitcoin and other cryptocurrencies, without converting these assets to U.S. dollars.

The proposed legislation is groundbreaking as it marks the first federal attempt to integrate digital currencies into the conventional mortgage industry. This could potentially expand homeownership opportunities for young Americans who hold a significant amount of digital wealth.

Introducing Bitcoin in Mortgage Assessments

Cynthia Lummis, a senator known for her pro-cryptocurrency stance, sponsors this legislative proposal. She has previously advocated for blockchain-friendly policies, including the “BITCOIN Act.”, which was aimed at government Bitcoin reserves and transparency. Fannie Mae and Freddie Mac, key players in the housing finance system, are the primary institutions affected by this proposed change in asset eligibility.

The bill was driven by an initial directive from the Federal Housing Finance Agency, led by Director William Pulte. While the proposal focuses on broadening the types of assets considered during mortgage assessments, no additional funding or institutional allocations have been announced in conjunction with the bill.

Wider Implications for Cryptocurrency Holders

Bitcoin, the most prominent cryptocurrency, is explicitly referenced in the legislation. Other digital assets that operate on cryptographically-secured distributed ledgers could also be included, although no specific mention of Ethereum or other altcoins is made. The bill focuses on Bitcoin and digital assets without naming DeFi protocols, stablecoins, or governance tokens.

In the broader context, several private lenders and financial institutions have allowed the use of Bitcoin ETF assets as collateral. However, this bill is unique in its federal scope. Notable examples of institutional digital asset acceptance include the approval of Circle’s USDC as margin collateral for derivatives trading.

Potential Regulatory Updates and Community Response

William Pulte from the Federal Housing Finance Agency contributed to the regulatory backdrop of this bill. However, other regulatory bodies such as the SEC and CFTC have not provided statements regarding this development. The likely impact of the bill will become apparent only if it translates into law and enters the implementation phase within relevant mortgage guidelines.

There is currently no activity related to technical project discussions on platforms such as GitHub. Likewise, the cryptocurrency community, including key opinion leaders, has not publicly commented on this development. Due to the nature of the bill, immediate impacts will be legislative rather than technological, meaning any substantial effects will take time to materialize.

“This legislation embraces an innovative path to wealth-building keeping in mind the growing number of young Americans who possess digital assets. We’re living in a digital age, and rather than punishing innovation, government agencies must evolve to meet the needs of a modern, forward-thinking generation.”

Cynthia Lummis, U.S. Senator

Further details about the bill can be accessed through the following links: