Cryptocurrency investments may have enabled low-income Americans to purchase homes at a higher rate than the rest of the population, according to a paper published Tuesday by the U.S. Treasury’s Office of Financial Research.
A study conducted by the Treasury Department’s independent arm that monitors U.S. economic risks found that the rise in cryptocurrency investment in recent years has led to significant increases in debt (particularly mortgages) in regions with the highest digital asset activity. They were looking for evidence that these financial pressures could pose a risk to America’s stability, but so far researchers have found that delinquency rates in the region remain low.
“Low-income consumers in areas with high exposure to cryptocurrencies are disproportionately more likely to have mortgage loans, and the average mortgage loan size is larger compared to average income before 2020,” they concluded.
“There is little to no evidence that distress over mortgage, auto, or credit card debt is higher among consumers in crypto-exposed regions,” according to the report. “In any case, the delinquency rate is relatively low.”
This potentially bright federal study could further strengthen the case of officials in the incoming presidential administration seeking to pave the way for U.S. cryptocurrency adoption. President-elect Donald Trump is expected to appoint financial regulators who favor friendly regulation and lighter enforcement in the digital asset sector.
The OFR report warned that these crypto households should be closely watched to see if such stress poses a risk to the U.S. mortgage market during a financial downturn. Cryptocurrencies remain a much more volatile investment than most other asset classes.
“An important implication for future monitoring is the increasing debt balances and leverage of low-income households exposed to cryptocurrencies,” the report noted. “Increasing distress among this group could lead to future financial stress, especially if exposure to these types of high-risk, high-risk consumers is concentrated in systemically important institutions.”
Figures from OFR show that between 2020 and 2024, mortgages in low-income areas with high cryptocurrency presence increased by 274%, with average mortgage balances much higher than in low-income areas with less digital asset activity. It was even higher than in middle-class areas.
“Cryptocurrency sales may have supported access to larger mortgages through larger down payments,” according to the findings.
The study relied on U.S. tax data to find cryptocurrency concentration, and since the latest data available was from 2021, cryptocurrency sales likely peaked in the market in 2022 before the industry collapsed. gain. Investors appear to have used these profits to back other financial moves, including buying significantly more homes and cars. However, OFR’s credit data was only as recent as this year.
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