The Administration Approves Crypto-Currency Partnerships with Credit Unions

In the United States, federally insured credit unions (FICUs) may engage with third-party suppliers to provide digital asset services to their members.

According to the National Credit Union Administration, these services may include the ability for “FICU members to purchase, sell, and retain uninsured digital assets” (NCUA).

The NCUA recently stressed in a letter that FICUs already had the power to enter into such partnerships, if certain requirements were satisfied.

The Trust Project is a global partnership of news organisations dedicated to developing transparency standards. In the United States, federally insured credit unions (FICUs) may engage with third-party suppliers to provide digital asset services to their members.

According to the National Credit Union Administration, these services may include the ability for “FICU members to purchase, sell, and retain uninsured digital assets” (NCUA). The NCUA recently stressed in a letter that FICUs already had the power to enter into such partnerships, if certain requirements were satisfied. However, it is highly dependent on local rules and regulations in the case of federally insured, state-chartered credit unions (FISCUs).

The NCUA is one of two federal organisations that insure depositors at depository institutions in the United States. While the FDIC guarantees commercial banks and savings institutions, the NCUA protects credit unions. The NCUA said that as an insurer, it does not ban FICUs from forming these arrangements.

According to the NCUA, such partnerships would be examined similarly to other third-party relationships. It emphasised that this was contingent upon “a FICU exercising good judgement and undertaking essential due diligence, risk assessment, and planning prior to introducing or bringing together an outside vendor with its members.” To this aim, the administration recommended that FICUs implement appropriate risk measuring, monitoring, and control processes for such third-party relationships.

Providing clarity

According to NCUA vice chair Kyle Hauptman, the advisory was triggered by two specific market events. “Credit unions have been seeing an infinite outflow of wealth to cryptocurrency exchanges, and many consumers would prefer to begin their crypto investment journey with their main financial institution,” Hauptman said. “Today’s policy addresses both issues and provides a new income source for credit unions interested in experimenting.”

While the letter sought to give clarification about FICUs’ capacity to provide crypto services to their members, the NCUA said that more guidelines may be required as digital assets expand. As a result, the government said that it will continue to analyse and handle emerging challenges.

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