Credit Unions in the United States Are Permitted to Work With Cryptocurrency Firms
According to recent regulatory advice, federally insured credit unions (FDICs) are able to develop agreements with digital asset businesses.
According to recent regulatory advice, federally insured credit unions (FICUs) are now able to collaborate with digital asset services.
The National Credit Union Administration said in a Dec. 16 letter that credit unions already have the capacity to enter into arrangements with third-party digital asset providers. This covers services that facilitate the purchase, sale, and storage of uninsured digital assets.
“As an insurer, the NCUA does not preclude FICUs from creating these arrangements,” the federal agency writes in its letter.
It then defines the circumstances under which credit unions may recommend members to other services. Credit unions, in instance, may connect members to non-deposit services that provide comparable risks to a credit union. Additionally, these services must be beneficial and rationally tied to the credit union’s core commercial operations.
Finally, FCIUs are not “restricted” in terms of the services they may direct members to, but they must use “good judgement and due diligence.” Credit unions are now allowed to recommend members to cryptocurrency services.
The NCUA stated that other US agencies, including the SEC, the Commodity Futures Trading Commission, and FinCEN, have jurisdiction over certain crypto activities. Credit unions “should be aware of this reality,” it said, adding that it would “continue to research and resolve these concerns.”
Previous Advances in Cryptocurrency Banking
Today’s news may seem insignificant, since only roughly 126 million Americans are credit union members—less than 39% of the US population.
Nonetheless, this change expands the methods through which banks and financial organisations are officially permitted to engage with cryptocurrency. In September 2020, the OCC approved banks’ use of stablecoins. In the same year, the SEC and OCC released declarations authorising banks to operate as custodians of digital assets. Additionally, Texas officials approved the storage of cryptocurrencies by banks in the state in June 2021.
Recent pronouncements from the Federal Reserve, the Office of the Comptroller of the Currency, and FinCEN indicate that the position of banks in the crypto market will be adjusted further in 2022 as a result of inter-agency debate. The author of this essay held BTC, ETH, and other cryptocurrencies at the time of writing.