The National Credit Union Administration, which regulates credit unions in the United States (NCUA), has confirmed that domestic credit unions may collaborate with third-party cryptoasset service providers to provide their customers access to cryptocurrency markets.
The NCUA made its position on cryptocurrency clear in an open letter to unions, stating that they may “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 designed to provide clarity to unions, and it added that it “does not prohibit [credit unions] from establishing these relationships.”
However, it stated that unions would need to ensure that their collaboration agreements adhere to certain criteria, stating, “the authority for unions [to] establish these relationships will depend upon the laws and regulations of their states.”
The NCUA also declared, “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 made a statement about the need for good 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 cautioned that unions “should establish effective risk measurement, monitoring and control practices for such third-party arrangements.”
The body suggested that further instruction would be provided 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.”
However, it also suggested that the new guidelines provide new revenue possibilities 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 be a shot in the arm for firms like payments firm NCR and crypto management company NYDIG, who in July announced a partnership to allow roughly 24 million customers at 650 US banks to buy and sell bitcoin (BTC) via NCR mobile apps and utilize NYDIG's custody services.
The NCUA's need for sound judgment, diligent research, and risk assessment procedures will almost certainly exclude small players from qualifying.