NCUA Approves Crypto Partnerships for Credit UnionsFebruary 15, 2022
National Credit Union Administration recently sent a letter to all the federally insured Credit Unions or FICUs about the change in policies. According to the new directive from the government, the FICUs will now be able to include cryptocurrency organizations and add support for cryptocurrencies. With the new changes, clients will now be able to declare their digital assets trading records legally without insurance.
The FICUs are now allowed to add support for the digital tokens as long as the conditions provided by the NCUA are met. There is also the leverage for a credit union to redirect their clients to a non-deposit service provider. However, before issuing the referral, the Credit union is under obligation to conduct a risk-management assessment. Third-party service providers and other complementary organizations also come under the same umbrella.
According to media speculation, the NCUA has refrained from putting the burden of accountability on Credit Unions. The letter from NCUA refers to the risk-assessment process performed as per due diligence and under sound judgment. The letter also notified that there are other major regulators like SEC, FinCEN, and CFTC that look after cryptocurrency regulatory aspects.
The letter informs the credit union operators that they should also be careful to comply with the regulatory requirements of all of these watchdogs before making business decisions. For the time being, cryptocurrency lending and borrowing is operating under a lot of uncertainty from government regulators.
At present, only 39% of the total population of the United States is part of Credit Unions. However, the development has been progressing at a slow pace throughout the years. The office of the Comptroller of Currency (OCC) allowed the banks to provide services for stablecoins in 2020. Both SEC and OCC also granted permission for banking institutions to work as digital asset custodians.
In light of new statements issued by the FinCEN, OCC, and Federal Reserve, it seems that banking institutions will be able to get more leverage on the matter of crypto-related services. Banks operating in Texas started offering crypto custodial services starting from this year in July after allowance from local regulators.