U.S. Credit Unions Permitted to Work With Crypto Firms

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Key Takeaways

  • Federally insured credit unions (FDICs) are permitted to establish relationships with digital asset services, according to new regulatory guidance.
  • This means that U.S. credit unions can refer their members to digital asset services.
  • Credit unions serve 126 million American citizens, representing just under 39% of the U.S. population.

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Federally insured credit unions (FICUs) are now permitted to work with digital asset services, according to new regulatory guidance.

Credit Unions Can Refer Members to Digital Assets Services

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

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

It goes on to establish the conditions in which credit unions can refer members to other services. In particular, credit unions can refer members to a non-deposit service so long as it offers similar risks to a credit union. Those services must also be useful and logically related to the credit union’s other business activities.

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

The NCUA noted that other U.S. regulators, such as the SEC, CFTC, and FinCEN have authority over some crypto activity. It noted that credit unions “should be cognizant of this fact” and that it will “continue to study and address these issues.”

Previous Developments in Crypto Banking

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

Nevertheless, this development adds to the ways in which banks and financial institutions are explicitly allowed to work with crypto. The OCC permitted banks to work with stablecoins in September 2020. The SEC and OCC also issued statements allowing banks to act as digital asset custodians in the same year.

Additionally, Texas regulators allowed banks in that state to store cryptocurrency for their clients 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 discussion.

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

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