Credit Unions Seeking Approval to Hold Crypto Directly to Compete with Banks
Credit unions risk losing members to banks and seeing their industry “start to shrivel” if they can’t offer products that people want.
Credit unions are now looking for approval to hold crypto assets directly.
This comes after the federal regulator clarified that federally insured credit unions were allowed to partner with third-party crypto service providers last week.
The National Credit Union Administration (NCUA) said in a letter that credit unions can now allow their members to buy, sell, and hold digital assets, as long as certain conditions are met.
The guidance is part of a broader trend toward the traditional financial services industry increasingly embracing crypto assets.
The recent letter from the regulator gives credit unions assurance that they may need to move forward with partnerships, said Lance Noggle, senior director of advocacy for payments and cybersecurity at the Credit Union National Association.
According to Noggle, credit unions would ultimately like to offer crypto-related products and services directly, much like banks. Last year, the banking regulator Office of the Comptroller of the Currency (OCC) gave banks the green light to offer custody services for crypto. More recently, they had written permission from their supervisory office first.
Without similar guidance as OCC, credit unions risk losing members to banks and seeing their industry “start to shrivel” because they cannot offer financial products and services that their customers want, Noggle said.
“It’ll help credit unions that have been kicking the tires move ahead and have a bit of a road map of what the regulator will expect,” he added.
Ann Kossachev, vice president of regulatory affairs for the National Association of Federally-Insured Credit Unions, told Bloomberg that her trade group is also looking for explicit approval for credit unions to offer crypto custody services.
Meanwhile, Bitcoin service provider NYDIG is already working with banks and credit unions and is expecting a couple hundred to roll out Bitcoin products to their customers by next summer.
With the federal regulators have made it “abundantly clear” that such partnerships are permitted, Patrick Sells, chief innovation officer at NYDIG, is expecting these numbers to rise further.