Cryptocurrency investments may allow low-income Americans to buy homes at higher interest rates than other citizens, according to a paper released Tuesday by the U.S. Treasury Department's Bureau of Financial Research.
According to a study conducted by the Treasury Department's independent arm that probes the economic crisis in the United States, increased investment in cryptocurrencies in recent years has led to a notable increase in debt, particularly mortgages, being sought in areas with the highest levels of digital asset activity. Accompanied. Researchers were looking for evidence that such financial strains could be dangerous to U.S. stability, but so far they have found that delinquency rates in these regions remain low. .
The paper concludes that “low-income consumers in regions with high exposure to cryptocurrencies are disproportionately likely to take out a mortgage, and their average mortgage size is larger compared to their average income before 2020.” are.
According to the report, there is “little to no evidence of higher levels of distress with mortgage, auto, or credit card debt among consumers in regions with higher exposure to cryptocurrencies. ”. “If anything, delinquency rates remain relatively low.”
This potentially illuminating federal study could further strengthen claims by incoming presidential administration officials to pave the way for greater U.S. adoption of cryptocurrencies. President-elect Donald Trump is expected to appoint financial regulators who support friendly regulation and less enforcement in the digital asset space.
The OFR document warned that such crypto households should be closely monitored in the event of a financial downturn to see whether such stress poses a risk to the U.S. mortgage market. Cryptocurrencies remain far more volatile investments than most other asset classes.
“A key point to monitor going forward is the increase in debt outstanding and leverage among low-income households with exposure to cryptocurrencies,” the report said. “Heightened stress in this population could lead to future economic stress, especially if this type of highly leveraged, high-risk consumer exposure is concentrated in systemically important institutions.”
OFR figures suggest that between 2020 and 2024, mortgages will increase by 274% in low-income areas with high cryptocurrencies, with average mortgage balances increasing more than in low-income areas with less digital asset activity. It was much higher. significantly higher than in middle-income areas.
“Cryptocurrency sales may have supported access to larger mortgage loans through larger down payments,” the study found.
The study relies on U.S. tax data to examine cryptocurrency concentration, and the most recent data available is from 2021, so cryptocurrency sales will continue to grow in the market before the industry collapses in 2022. It is likely that the sale was at its peak, meaning that the sale was more likely to result in a large profit. You will get profit. The investors apparently used these profits to back other financial moves, including significantly larger purchases of homes and cars. However, OFR's credit data was from this year.
Read more: Cryptocurrency hides in U.S. Treasury’s new financial inclusion strategy
