U.S. Regulator Allows Credit Union And Crypto Provider Partnerships

Federally insured credit unions (FICUs) are now able create partnerships with third-party digital asset service providers, announced the National Credit Union Administration (NCUA) on Thursday.

According to the NCUA statement:

“This includes facilitating member relationships with third parties that allow FICU members to buy, sell and hold various uninsured digital assets with the third-party provider outside of the FICU.”

The NCUA is a U.S. regulator that oversees credit unions, and acts as a counterpart to the Office of the Comptroller of the Currency (OCC), which national banks’ regulator.

According to the NCUA the purpose is to offer clarity to FICUs when it comes to building relationships with third-party digital asset providers. Further guidance may be necessary as digital assets and technologies evolve, and the association will continue to study and address issues that arise, said the NCUA.

Kyle Hauptman, vice chair of NCUA, commented:

“Credit unions have been watching endless outflows of cash to crypto exchanges, and many people would rather use their primary financial institution for their first foray into crypto investing. Today’s guidance helps both concerns and gives a new revenue stream to credit unions want to try it out. Financial services has always been ‘adapt or die’ and I don’t want credit unions to go the way of Blockbuster Video because we, the regulators, prevented innovation.”

NCUA said, that Federal credit unions are able to act as finders to bring together their members with providers of third-party services, including those related to digital assets.

In July, the NCUA published a request for information (RFI) after its three board members unanimously voted to do so. These requests asked how distributed ledger technology (DLT) and decentralized finance (DeFi) might affect the credit union system, and how the NCUA’s regulated entities might interact with these technologies and other crypto-related tools.