History Doesn’t Repeat, It Just Tokenizes Which Is How MBS Get Packaged With Junk Collateral (Again)

FHFA Director Bill Pulte just ordered Fannie Mae and Freddie Mac to start counting crypto as a mortgage asset and like, yeah congrats to the five people who actually have meaningful crypto holdings for down payments but also congrats to taxpayers who are now bagholding whatever dumpster fire gets originated when someone qualifies for a half-million dollar mortgage based on ethereum they bought at peak hype.

Senate Democrats including Durbin, Warren, and Merkley sent a letter saying “Crypto-backed mortgages, launched without any pilot, opportunity for public input, or public research into default risk, flaunt this duty.”

Crypto is subject to heightened risks of loss due to scams, cyber hacks, or physical theft, which could leave homeowners vulnerable to losing their crypto assets with little hope of recovery.

here’s the thing that absolutely sendddss me! Fannie Mae previously found that the use of cryptocurrency for deposits, payments, or collateral was among the “least appealing application” of blockchain but still ran with this anyways, citing crypto volatility as a key potential barrier.

so the same company that said “yo this is dumb” is now like “actually let’s securitize this and sell it to pension funds.” and you know what happens next right? these mortgages get bundled into mortgage-backed securities. hedge funds will buy them, not for the reason you think…. Or maybe you can predict… rating agencies slap AAA on them because the collateral is “diversified crypto assets.”

then 2028 rolls around, the market realizes nobody actually wanted to tie a half-million dollar asset to something that moves 20% on Elon’s tweets, and suddenly your 401(k) is bleeding because MBS tranches are full of loans where the down payment evaporated. Voila they literally just rebuilt 2008 but with blockchain instead of subprime.​​​​​​​​​​​​​​​​