US Regulator Tells Credit Unions They Can Team Up with Crypto Firms
America’s credit regulator, the National Credit Union Administration (NCUA) has told domestic credit unions that they can partner with third-party cryptoasset service providers to give their members access to crypto markets.
The NCUA outlined its stance on crypto in an open letter to unions, explaining that they could “buy, sell and hold various uninsured digital assets with [a] third-party provider outside of the federally insured credit unions.”
The body said that its move was intended to “provide clarity” to unions, and rather than actively encouraging such partnerships, it noted that it “does not prohibit [credit unions] from establishing these relationships.”
However, it also noted that unions will need to ensure their partnership deals meet certain standards, adding that “the authority for unions” to “establish these relationships will depend upon the laws and regulations of their states.”
It also wrote:
“A [union]’s relationship with third parties offering [crypto-related] services and related technologies will be evaluated by the NCUA in the same manner as all other third-party relationships.”
The body spoke of the need to exercise “sound judgment” and “conduct the necessary due diligence, risk assessment and planning when choosing to introduce or bring together an outside vendor with its members.”
And it warned that unions “should establish effective risk measurement, monitoring and control practices for such third-party arrangements.”
The body hinted that further “guidance” would likely be introduced at a later date, noting:
“The NCUA anticipates that further guidance may be necessary with the continued growth of digital assets and the technologies that make them available. […] This new guidance was a necessary step for providing clarity on the existing authority credit unions have.”
But it also suggested that the new guidance “provides new opportunities for revenue in the digital asset marketplace,” for credit unions, remarking that demand has “only continued to expand as ordinary consumers are presented with easy access to cryptocurrencies and other digital assets.”
The news will have come as a welcome boost for the likes of the payments firm NCR and crypto management specialist NYDIG, who in summer this year struck a deal to allow around 24 million customers at 650 US banks to buy and sell bitcoin (BTC) through NCR mobile apps – and making use of NYDIG’s custody services.
The NCUA’s insistence on “sound judgment,” “due diligence” and “risk assessment” protocols will likely mean that only major (and highly compliant, well-insured) players in the crypto custody space will fit the regulator’s bill.