Crypto rules for mortgages must reflect self-custody reality

RBI Weighs In: How Will Crypto Holdings Impact Home Loan Eligibility for Indians?

The Reserve Bank of India (RBI) is carefully evaluating how cryptocurrency holdings should be factored into mortgage risk assessments for aspiring Indian homeowners. This development could pave the way for long-term crypto investors in India to leverage their digital assets when applying for home loans, potentially without having to convert them into rupees.

Understanding the Current Landscape

Currently, traditional lending institutions in India primarily assess an applicant’s credit score, income, and existing asset base in rupees. The inclusion of cryptocurrency introduces a new layer of complexity due to its volatile nature and evolving regulatory framework. The RBI’s focus is on ensuring responsible lending practices while acknowledging the growing popularity of digital assets among Indian citizens.

Self-Custody vs. Exchange-Held Crypto: A Key Distinction

A critical aspect under consideration is the difference between self-custodied crypto assets (held in a private wallet controlled by the individual) and crypto assets held on centralized exchanges. The security and verifiability of these two types of holdings differ significantly. Potential challenges include:

• Verification: Proving ownership and value of self-custodied assets can be complex.
• Volatility: Crypto’s price fluctuations could impact mortgage risk.
• Regulation: The evolving regulatory landscape adds uncertainty.

Potential Benefits for Indian Homebuyers

If implemented thoughtfully, the integration of crypto asset assessments could offer significant benefits:

• Wider access to home loans for crypto investors.
• Greater financial flexibility for individuals with substantial digital asset holdings.
• Recognition of crypto as a legitimate asset class by Indian financial institutions.

It is estimated that over 10 million Indians currently hold cryptocurrency. Allowing them to leverage these assets for mortgages could significantly boost the housing market and empower a new generation of homeowners. However, strict regulatory safeguards will be crucial to mitigate risks.

The RBI’s ongoing deliberations are expected to shape the future of mortgage lending in India and determine the role of cryptocurrency in the nation’s financial ecosystem. The outcome could have a profound impact on the Indian economy and the financial well-being of millions.