The United States National Credit Union Administration (NCUA) has issued a new directive to Federally Insured Credit Unions in the country, giving them the leeway to engage with digital assets, a different stance compared with the SEC who has kept the subject of crypto regulations unclear up until this point. With the directive, credit unions operating in the country can now partner with third-party digital currency service providers to give their members direct access to the nascent crypto ecosystem.
“The purpose of this letter is to provide clarity about the already existing authority of federally insured credit unions (FICUs) to establish relationships with third-party providers that offer digital asset services to the FICUs’ members, provided certain conditions are met. This includes third-party provided services to allow FICU members to buy, sell, and hold uninsured digital assets with the third-party provider outside of the FICU. Digital assets are one of many terms used to describe distributed ledger technology (DLT) based tokens,” the NCUA letter detailed.
Despite these flexibility granted to domestic credit unions, the NCUA said operators must adhere to certain standards in order to complete any prospective partnerships. The regulator pointed out that “the authority for unions” to “establish these relationships will depend upon the laws and regulations of their states.”
The NCUA said it will be publishing the guidelines that will govern this venture at a much later date, however, the regulator said it will be evaluating all prospective partnerships with third-party crypto platforms, a move that will ensure that all required standards are met.
US NCUA and the Contribution to Crypto Engagement Clarity
The growth in the digital currency ecosystem is no longer negligible as stakeholders in traditional industries are exploring avenues to take advantage of the growth in the nascent asset class.
The US NCUA’s directive is an attempt to remove the ambiguity for its members, some of whom are possibly already exploring taking a dive into the space. With the NCUA’s forthcoming stance, making this move will no longer be confusing and illegal.
“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.”
Established American trading platforms such as Coinbase Global Inc, Kraken, and FTX.US amongst others will stand as some of the biggest beneficiaries of this clarity given by the NCUA.