The Trump administration issued a directive on Wednesday ordering Fannie Mae and Freddie Mac to start considering cryptocurrency as collateral in single-family mortgage loan risk assessments.

The move reflects cryptocurrency’s growing mainstream acceptance as collateral in the United States. The order was signed by William Pulte, director of the Federal Housing Finance Agency.

Recommended Stories

• July Social Security direct payment worth $967 goes out in five days
• First round of July Social Security payments go out in 13 days
• White House predicts up to $2.3T in growth-induced deficit reduction from tax bill

“Cryptocurrency is an emerging asset class that may offer an opportunity to build wealth outside of the stock and bond markets,” Pulte wrote.

Cryptocurrency holdings have traditionally not been considered in mortgage risk assessments unless the digital currency is converted to dollars, in which case it would be considered. Once the order is enacted, borrowers will no longer need to convert cryptocurrency before a mortgage loan closes.

The directive said that Fannie Mae and Freddie Mac, two government-sponsored enterprises placed under conservatorship by the FHFA following the 2008 financial crisis, must only consider cryptocurrency assets stored on U.S.-regulated, centralized exchanges and that can be evidenced.

Centralized exchanges, like Coinbase, allow users to buy, sell, and trade cryptocurrencies, while cryptocurrency wallets store and manage users’ digital assets. Cryptocurrency advocates prefer to store their coins in wallets instead of exchanges for security and custody protections. Coins stored in wallets would not be considered, however.

When applying for a mortgage, homebuyers may increase their buying power if they use cryptocurrency holdings as collateral. Therefore, borrowers could get a stronger financial profile with cryptocurrency assets, which would make it easier to become qualified for a loan.

SENATE PASSES LANDMARK CRYPTOCURRENCY BILL WITH DEMOCRATIC HELP

But because the digital currency is generally considered a high-risk investment, the mortgage giants must factor in cryptocurrency’s volatility and submit final proposals to their respective boards and the FHFA for approval.

The new guidance aligns with President Donald Trump’s vision “to make the United States the crypto capital of the world,” Pulte said. In March, Trump signed an executive order establishing a Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile to normalize crypto, which he sees as a viable tool for boosting economic growth.