I have a dream!
As a bitcoiner, there's no better feeling than the sense of financial security that comes with knowing that you have full control over your wealth when you hold bitcoin. Especially if you hold your bitcoin in a geographically distributed multi-sig cold storage wallet. This is the pinnacle of ultimate control. Only you have the power and the knowledge to access the private keys that enable you to move your wealth from one public address to another as you exchange value for goods and services throughout the economy. No corporation, government, or individual can stop you from signing that key and broadcasting your transaction to the globally distributed peer-to-peer bitcoin network.
This is the way it should be. This is the way it will be. But between should and will, there is a massive chasm that needs to be crossed.
Nothing makes this clearer to an individual than when they go to purchase a house only to find out that the mortgage broker does not recognize the bitcoin they hold in cold storage as a personal balance sheet asset that can contribute to their credit worthiness. Bitcoin is the most liquid, fungible, divisible, tradable, and saleable asset on the planet and yet it is not recognized as something that factors into whether or not you are financially capable of owning a house. Whether or not you have assets that make a bank comfortable lending you money.
This is completely insane to me and it should be completely insane to anybody who has any common sense. For years I've wondered why this is the case. Luckily for me, the Bitcoin Policy Institute wrote a piece yesterday that explains exactly why.
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Apparently, there are some guidelines that were put in place by Fannie Mae in May of 2022 that explicitly say that virtual currencies in and of themselves cannot be recognized as assets that mortgage brokers and banks can take into consideration when underwriting mortgages. In Fannie Mae's eyes, if one has bitcoin and wants to acquire a mortgage, they need to sell that bitcoin for cash, have it sit in a bank account for a certain period of time, and after a period of time it will be recognized as an asset on their personal balance sheet that can factor into their credit worthiness.
Fannie Mae is putting individuals who prefer to store their wealth in bitcoin in a position where they're forced to either sell their bitcoin for dollars to send to a bank account or leverage their bitcoin by taking out a collateralized loan for cash that will then sit in a bank account. This is a very inefficient process. It shouldn't be this way. If you have an amount of wealth held in bitcoin, you should be able to go to a bank or a mortgage broker and show them that you control the keys that can move the bitcoin held in specific public addresses. And therefore, you have control of those assets, which by extension should contribute to your overall credit worthiness.
Unfortunately, the selling guide announcement put forth by Fannie Mae on May 4th, 2022, SEL-2022-04 makes this impossible. I'm writing this newsletter to say that this selling guide announcement should be reworked so that individuals holding bitcoin as an asset on their personal balance sheet can have that bitcoin recognized as part of their net worth, so that they can go and attain something like a mortgage.
I'm not even arguing for bitcoin-backed mortgages, which I do think should exist. This is something even more rudimentary than that.
Luckily for us, the current director of the FHFA is a bitcoiter, Bill Pulte. This long-winded newsletter can be distilled into a call to action for the Director Pulte to change the selling guide announcement. Make it so that bitcoin is recognized as an asset on an individual's balance sheet that contributes to their credit worthiness in the eyes of banks and mortgage underwriters. Eliminate the tough decisions that these individuals face.
Do I sell this Bitcoin? Do I leverage this Bitcoin up to get cash to prove that I'm credit worthy?
Imagine a world in which an individual could prove to a bank that they control a particular UTXO or group of UTXOs (bitcoin) and are therefore creditworthy.
While it's dismaying that this is the current state of the intersection of the traditional banking system and the individuals and businesses who operate on a bitcoin standard, let's look at the bright side; there's a lot of opportunity here. Bitcoin's native properties give individuals, businesses, and other entities alike the ability to prove that they are creditworthy via private-public key cryptography. The signing of a message that proves that one controls the money in a particular address.
Imagine a banking system where this is the norm to prove creditworthiness instead of going to Credit Karma or Rocket Mortgage or some other hyper-centralized third party collecting obscene amounts of data to vouch on your behalf that you are creditworthy, you are able to simply use a private key that you control to sign a message to say, "I don't need Credit Karma. I don't need Rocket Mortgage. I don't need Intuit or whoever else to prove that I'm creditworthy. I can do it myself."
Let's make the change. This is a bit of a ramble, but I think it's an important one. We need to move on from this insanity of putting people who hold their wealth in bitcoin in these very frustrating and precarious situations when they simply want to go buy a house and they know they're credit worthy but the banking system refuses to acknowledge it.
I have a dream, that one day my children will not be judged by the form factor of their money, but their ability to sign a private key that proves they own something.
Brian Morgenstern's thesis about Bitcoin's irreversibility through financial integration is compelling. With the Fed's removal of restrictive guidance (SAB-121), banks now have a four-year runway to embed Bitcoin into traditional financial products. As Brian emphasized, this integration is already happening with deals like Riot's $100M liquidity agreement with Coinbase. The private market doesn't need to wait for government permission - they can start building Bitcoin products immediately.
"Four years hence, who knows? I mean... there's a lot of creativity happening right now, a lot of new avenues for liquidity and leveraging Bitcoin" - Brian Morgenstern
I've been beating this drum for months - we have air cover from the Trump administration to embed Bitcoin into as many nooks and crannies of the US economy as possible. Brian agrees that even without a Strategic Bitcoin Reserve, if the private market embeds Bitcoin into everyday products like insurance, lending, and structured finance, it becomes almost impossible for future administrations to unwind. The more systemically important Bitcoin becomes, the harder it will be for political opponents to destroy it.
Check out the full podcast here for more on BitBonds as a revolutionary treasury tool, the global Bitcoin reserve arms race, and how the removal of Operation Choke Point affects miners.
Treasury spent $5T yearly without budget codes, DOGE finds - via X
Trump gives rousing speech at Alabama commencement - via X
Robinhood sees growth as Gold users bring $180K average - via X
Alberta fights Ottawa's net-zero power rules as unconstitutional - via X
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Ten31, the largest bitcoin-focused investor, has deployed 158,469 sats | $150.00M across 30+ companies through three funds. I am a Managing Partner at Ten31 and am very proud of the work we are doing. Learn more at ten31.vc/invest.
Final thought...
Don't sleep on Carmel Valley cabs.
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