U.S. Credit Unions Allowed To Work With Crypto Firms

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Key Points to Remember Federally Insured Credit Unions (FDICs) are allowed to establish relationships with digital asset services, in accordance with new regulatory guidelines. This means that American credit unions can steer their members towards digital asset services. Credit unions serve 126 million US citizens, representing just under 39% of the US population. Share this article

Federally Insured Credit Unions (FICUs) are now allowed to work with digital asset services, under new regulatory guidelines.

Credit unions can steer members towards digital asset services

A December 16 letter from the National Credit Union Administration states that credit unions have the existing authority to forge relationships with third-party digital asset services. This includes services that allow customers to buy, sell, and hold uninsured digital assets.

“As an insurer, the NCUA does not prohibit FICUs from establishing these relationships,” the letter from the government agency reads.

It then establishes the conditions under which credit unions can refer their members to other services. In particular, credit unions can direct members to a no-deposit service as long as it presents risks similar to those of a credit union. These services must also be useful and logically linked to the other business activities of the credit union.

Ultimately, FCIUs are “not limited” in what services they can refer members to, but must exercise “good judgment and due diligence”. This leaves credit unions free to refer members to crypto services.

The NCUA noted that other US regulators, such as the SEC, CFTC, and FinCEN, have authority over certain crypto activities. He noted that credit unions “should be aware of this fact” and that they “will continue to study and resolve these issues.”

Previous developments in crypto banking services

Today’s news may be relatively minor, as only 126 million Americans are members of credit unions, which is less than 39% of the population of the United States.

Nonetheless, this development is in addition to the means by which banks and financial institutions are explicitly allowed to work with crypto. The OCC authorized banks to work with stablecoins in September 2020. The SEC and OCC also issued statements authorizing banks to act as custodians of digital assets in the same year.

Additionally, Texas regulators authorized banks in that state to store cryptocurrencies for their customers in June 2021.

Recent statements from the Federal Reserve, OCC and FinCEN suggest that the role of banks in the crypto market will be further refined in 2022 following inter-agency discussions.

Disclosure: At the time of writing, the author of this article owned BTC, ETH, and other cryptocurrencies.

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