Opinion by: Margaret Rosenfeld, Chief Legal Officer of Everstake
The Federal Housing Finance Agency’s (FHFA) recent directive to explore how cryptocurrency could be Single-family’s mortgage risk assessment includes is a welcome and long step.
If implemented, it can allow long -term crypto holders to use their digital assets when qualifying for a mortgage without being forced to liquid.
To realize its potential, the resulting proposals should reflect how crypto works. And that means recognizing the legitimacy of self-custodied digital assets.
Misreading the FHFA Directive
Some are that -misread that the directive that requires crypto to be custodized in an exchange of US regulation to count. That would be a serious mistake – and contrary to the simple text of the directive.
“Digital assets … must be capable of proven and stored in a regulation, centralized exchange subject to all applicable laws.”
The phrase “capable of stored” is clear. The directive calls for property to be proven and securely handled through the infrastructure of US regulation, not for a prohibition on property held elsewhere. Terifi should be the standard, not a specific model of caution.
The security case for self -care
Self-custody is not a fringe activity in crypto. This is the foundation of architecture and system security. Compared to centralized exchanges, well managed self-custody can offer good transparency, auditability and protection. The collapse of basic custodians and centralized exchanges have shown how a true risk of counterparts can be.
Properly documented, self-properties can be fully heard, as onchain notes show balance and ownership. They also offer a higher level of security, as cold storage and non-custodial wallets reduce single points of failure. In addition, self-customied properties have been proven, with third-party tools available to prove purse handling and transaction history.
If policy manufacturers do not include these properties from the mortgage underwriting because they do not replace the exchange, they risk the incentive of less safe skills and punish users for crypto producing correctly.
A plot that supports change
There is a better path. Any sound framework of crypto mortgage should allow both self-customied and custodial holdings, provided they meet verifi and liquidity standards. It should also apply appropriate appreciation discounts (haircuts) to account for volatility.
Another basic requirement is to limit the crypto part of the total reserve using a standard risk -based approach.
Related: US Regulator Fannie Mae, Freddie Mac to consider crypto for mortgage
Finally, it should order the clear documentation of verification and pricing methods, regardless of the type of caution. This thought has already been applied to PABAGU -change of ownership such as stocks, foreign currencies and even private shares. Crypto should be treated without another.
Do not force crypto into the stale models that
This directive has the potential to modernize Finance in housing For a digital age. However, it should avoid the trap of forcing the crypto to mimic traditional models to understand only.
We do not need to flag decentralization to fit the old risk boxes. We just need smart ways to prove it. Let’s get it right, not only for crypto holders but also for the integrity of the mortgage system itself.
This is just one example of a larger challenge facing a new crypto policy. From tax reporting to security classification, so many policies have been drafted to think that all users rely on centralized mediators. Millions of participants choose a self-custody or decentralized platform because they value transparency, autonomy, lack of traditional mediators and security. Others prefer regulated custodians who offer centralization.
Both models are legitimate, and any effective regulatory framework should recognize that users are constantly asking for different options.
More technical education about decentralized technology is important to bridge this space. Policy and regulator manufacturers need a deeper understanding of how decentralization works, why self-care is important and what tools exist to prove ownership without relying on third parties.
Without this foundation, future directives, statements, regulations and law risks repeated the same mistake, overlooking large segments of ecosystem and failed accounts for the entire scope of participants in the crypto industry.
Opinion by: Margaret Rosenfeld, chief legal officer of everstake.
This article is for general information purposes and is not intended to be and should not be done as legal or investment advice. The views, attitudes, and opinions expressed here are unique and do not necessarily reflect or represent the views and opinions of the cointelegraph.
