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ProPublica reported last month that the U.S. Department of Housing and Urban Development (HUD) was considering the deployment of cryptocurrency and blockchain technology to monitor agency grants. This prompted the leading Democrat on the House Financial Services Committee to criticize HUD leadership.
Rep. Maxine Waters (D-Calif.), alongside congressional allies Emanuel Cleaver (D-Mo.) and Stephen Lynch (D-Mass.), submitted a letter to HUD Secretary Scott Turner in which they recalled the 2008 financial crisis as a warning against the potential use of such currencies in the federal grantmaking process. Additionally, they invoked actions by the White House to dismantle the Consumer Financial Protection Bureau (CFPB).
“[T]he Trump administration has illegally sought to dismantle the CFPB as HUD dismantles other federal oversight mechanisms, such as fair housing protections, under your leadership,” the letter stated.
“We cannot afford to repeat the same mistakes of the past. Introducing blockchain technology or crypto into HUD or any other federal agency without proper Congressional action, a sound regulatory framework, oversight, or public input is simply reckless.”
Cryptocurrency markets, the lawmakers contend, are “highly volatile, prone to fraud, and vulnerable to sudden collapses.” They cite a recent report showing that crypto scams cost investors at least $9.9 billion in 2024.
The letter mentions the collapse of cryptocurrency marketplace FTX in 2022 and the subsequent conviction and imprisonment of its co-founder, Sam Bankman-Fried. The lawmakers also touch on the business activity of President Donald Trump and his sons to launch their own stablecoin.
“The federal government cannot allow under-regulated financial products to infiltrate critical housing programs, especially when they have already proven to be dangerous, speculative, and harmful to working families,” the letter stated. “It is unclear how these technologies, which have not been widely adopted even by the real estate industry, would help HUD meet its mission.”
The lawmakers demand that any additional action toward incorporating cryptocurrency into HUD operations wait until Congress has weighed in with the establishment of a legal framework.
The letter also mentioned that the idea is being championed by Irving Dennis, HUD’s new principal deputy chief financial officer and a former partner at Ernst & Young (EY). At the time of ProPublica’s report, Dennis and HUD spokesperson Kasey Lovett denied its substance, but an EY executive stated that certain meetings on the topic had taken place.
“The department has no plans for blockchain or stablecoin,” Lovett told the outlet last month. “Education is not implementation.”
The mortgage industry at large has been curious for some time about the potential efficiencies that could come from cryptocurrency and blockchain technology.
The Mortgage Industry Standards Maintenance Organization (MISMO) in 2023 released a white paper on the topic. It partially focused on how the regulatory crackdown in the years after the 2008 housing crisis tended to increase production expenses.
