Administration claims crypto partnerships for credit unions

0


Federally Insured Credit Unions (FICUs) in the United States may partner with third-party providers to provide digital asset services to their members.

These services can notably enable “FICU members to buy, sell and hold uninsured digital assets,” according to the National Credit Union Administration (NCUA). In a recent letter, the NCUA pointed out that the power of FICUs to engage in such partnerships already exists, provided certain conditions are met. However, in the case of federally insured state chartered credit unions (FISCUs), it depends more on local laws and regulations.

The NCUA is one of two federal agencies that provide deposit insurance to depositors of US deposit-taking institutions. While the Federal Deposit Insurance Corporation (FDIC) insures commercial banks and savings institutions, the NCUA covers credit unions. As an insurer, the NCUA has said it does not prohibit FICUs from establishing these relationships.

The NCUA said these relationships would not be assessed any differently from other relationships with third parties. He stressed that it depended on “an FICU exercising good judgment and carrying out the necessary due diligence, risk assessment and planning when choosing to introduce or bring together an external supplier with its members” . To this end, the administration added that the FICUs should establish effective risk measurement, monitoring and control practices for these agreements with third parties.

Provide clarity

According to NCUA Vice President Kyle Hauptman, the direction was driven by two things in particular that had happened in the market. “Credit unions have observed endless outflows of money into crypto exchanges, and many people prefer to use their primary financial institution for their first foray into crypto investing,” Hauptman said. “Today’s advice both helps concerns and gives credit unions a new source of income [that] want to try it.

While the letter served to clarify the ability of FICUs to provide crypto services to their members, the NCUA said further guidance may be needed as digital assets continue to evolve. Therefore, the administration said it will continue to investigate and resolve issues as they arise.

Warning

All information on our website is posted in good faith and for general information purposes only. Any action that the reader takes with the information found on our website is strictly at his own risk.


Share.

About Author

Comments are closed.