**Crypto Mortgages: New Rules May Overlook Self-Custody Reality**
[Image: Crypto rules for mortgages must reflect self-custody reality]
**The Problem with the FHFA Directive**
The Federal Housing Finance Agency (FHFA) has issued a directive on crypto in mortgage risk assessments, but it may have overlooked a crucial aspect: self-custodied assets. This oversight could lead to unintended consequences for homebuyers, increasing counterparty risk in the process.
**What Are Self-Custodied Assets?**
Self-custodied assets refer to cryptocurrencies or digital assets held directly by an individual, rather than through a third-party custodian or exchange. This means that the individual has full control over their assets, without relying on intermediaries.
**The Counterparty Risk Conundrum**
By excluding self-custodied assets from mortgage risk assessments, the FHFA directive may inadvertently push homebuyers towards custodial solutions, increasing their counterparty risk. This means that homebuyers may be more vulnerable to risks associated with third-party custodians, such as security breaches or asset seizures.
**Why the FHFA Should Reconsider**
The FHFA should revisit its directive to ensure that it takes into account the reality of self-custody in the crypto space. By doing so, it can promote a more inclusive and risk-aware approach to mortgage lending, protecting homebuyers and the broader financial system.
**The Future of Crypto Mortgages**
As the crypto market continues to evolve, it’s essential that regulatory bodies adapt to the changing landscape. By acknowledging the importance of self-custody, the FHFA can help pave the way for more innovative and secure mortgage solutions, benefiting both homebuyers and the financial industry as a whole.
