Crypto's Mainstream Leap: US Mortgages and Japan's Financial Product Reclassification
Global financial landscapes are shifting as the US housing regulator explores integrating cryptocurrency holdings into mortgage qualification, while Japan proposes a significant reclassification of crypto as financial products. These developments signal a growing mainstream acceptance and regulatory adaptation to digital assets in major economies.
US Housing Regulator Considers Crypto for Mortgages
The Federal Housing Finance Agency (FHFA) in the United States is set to investigate the inclusion of cryptocurrency holdings in mortgage qualification assessments. FHFA Director William Pulte announced the agency's intent to study how digital assets, such as Bitcoin, could factor into the income and wealth checks for Fannie Mae, Freddie Mac, and the Federal Home Loan Banks.
Currently, Fannie Mae and Freddie Mac require crypto holdings to be converted to US dollars and held in regulated financial institutions to be considered for mortgage applications. This potential shift follows the SEC's rescission of accounting guidance SAB 121, which previously complicated banks' ability to offer crypto-backed loans.
- The FHFA's review could integrate crypto assets deeper into traditional finance.
- This move may open doors for new types of crypto-backed lending products from traditional banks.
- Reports indicate a rising trend of lower-income households using crypto gains to pay off mortgages.
Japan's Bold Crypto Reclassification and Tax Reform
Japan's Financial Services Agency (FSA) has proposed a comprehensive reclassification of cryptocurrencies, aiming to recognize them as "financial products" under the Financial Instruments and Exchange Act (FIEA). This reclassification could pave the way for crypto exchange-traded funds (ETFs) and introduce a flat 20% tax on digital asset income, mirroring the tax treatment of stocks.
This proposed tax reform would significantly reduce the current progressive tax rates on crypto gains, which can go up to 55%, making crypto investing more appealing to both retail and institutional investors. The initiative aligns with Japan's "New Capitalism" strategy, seeking to establish the country as an investment-led economy.
Key aspects of Japan's proposal include:
- Reclassification: Crypto to be treated as financial products under FIEA.
- Tax Reform: Shift from progressive tax rates (up to 55%) to a flat 20% on crypto gains.
- ETFs: Clear path for the launch of crypto ETFs.
- Market Growth: Over 12 million active crypto accounts in Japan as of January 2025, with assets exceeding $34 billion.
- Institutional Interest: Response to global surge in institutional engagement and crypto ETF flows.
Global Implications of Regulatory Shifts
These parallel developments in the US and Japan highlight a global trend towards integrating digital assets into established financial systems. The potential for crypto to be considered in US mortgage applications could significantly broaden its utility and acceptance among everyday consumers. Simultaneously, Japan's proactive regulatory overhaul, including tax reforms and the potential for crypto ETFs, positions it as a leader in fostering a more crypto-friendly investment environment. Both initiatives underscore a growing recognition of cryptocurrencies as legitimate and significant financial assets.