FHFA Could Expose Homebuyers To Greater Counterparty Risk

Opinion

The recent guidance of the Federal Housing Agency (FHFA) to explore how to include encrypted currency in a single family mortgage risk assessments is a welcome and long step.

If it is implemented, it may be allowed for long -term encoding to use their digital assets when qualifying to obtain a real estate loan without forcing them to liquidate them.

To achieve its capabilities, the resulting proposals must reflect how the encryption actually works. This means identifying the legitimacy of the self -assets of the self.

Poor FHFA direction reading

Some have already made a mistake in reading the guidance that requires encryption in order to identify an organizer of the United States to count. This will be a serious mistake – unlike the normal text of guidance.

“Digital assets should be … able to prove and store them on a central exchange organized by the United States, subject to all applicable laws.”

The phrase “capable of storage” is clear. The guidance calls for verification of assets and dealing with them safely through the infrastructure subject to the American organization, and not to prohibit the assets held elsewhere. Verification should be the standard, not a specific model of nursery.

The issue of security for self -improvement

Self -body is not a marginal activity in encryption. It is the basis of the structure of order and security. Compared to the central stock exchanges, the well -managed self -preservative can provide transparency, review and superior protection. The collapse of the main guards and central exchanges showed how the real opposite party risks can be.

Self -documented self -use assets can be fully scrutinable, as onchain records show balance and ownership. It also provides a higher level of safety, because cold storage and non -trustee reduces individual failure points. In addition, self -use autonomous assets can be verified, with an external entity available to operate on wallet property and the date of transactions.

If policymakers exclude these assets from real estate subscription just because they are unreliable, they risk stimulating safer practices and punishing users to properly encrypts.

A frame that supports innovation

There is a better way. Any proper mortgage framework must be allowed to encrypt on both self -assault and combustion possessions, provided that it meets the criteria for verification and liquidity. The right evaluation discounts (haircuts) must also be applied to calculate the volatility.

There are other major requirements for reducing the Crypto share of the total reserves using a standard risk -based approach.

Related to: The orders of the American organizer Fanny May, Freddy Mac to consider the mortgage

Finally, it must impose a clear documentation of the methods of verification and pricing, regardless of the type of custody. This thinking is already applied to volatile assets such as stocks, foreign currencies and even private stocks. The encryption should be treated differently.

Do not force encryption on outdated models

This guidance has the ability to update housing financing for a digital era. However, you should avoid the trap of compulsion on the tradition of traditional models just to understand them.

We do not need to flatten decentralization to suit old risk boxes. We just need smart ways to check this. Let’s get this correctly, not only for encryption holders but also for the safety of the mortgage system itself.

This is only one example of a greater challenge facing a new encryption policy. From tax reports to securities classification, many rules are formulated on the assumption that all users depend on central intermediaries. Millions of participants choose self -need or decentralization platforms because they appreciate transparency, self -independence, traditional intermediaries and security. Others prefer the organized guardian of the central.

Both models are two projects, and any effective organizational framework must be aware that users will continue to request different options.

More technical education on decentralized technology is necessary to fill this gap. Politics and organizers need a deeper understanding of how decentralization works, and why does the autonomous body and tools to verify ownership without relying on third parties.

Without this basis, future directives, data, regulations and legislation risk repeating the same error, which ignores large sectors of the ecological system and fails to calculate the full range of participants in the encryption industry.

Opinion: Margaret Rosfield, chief legal official at Everstake.

This article is intended for general information purposes and does not aim to be and should not be considered legal or investment advice. The opinions, ideas and opinions expressed here are alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.