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- As per the new regulatory guidelines, Federally insured credit unions (FDICs) are now free to partner with digital asset service providers.
- Credit Unions can offer services that offer similar risks as the center union. The services, however, must be logically related to other activities of credit unions.
- Although just about 126 million Americans, i.e.39% of the population of the United States, are members of the credit union, it still is a significant step.
The National Credit Union, in an announcement on Thursday, said that Federally insured credit unions (FICUs) are now allowed to partner with digital asset services.
It is also mentioned in the government agency’s letter, “As an insurer, the NCUA does not prohibit FICUs from establishing these relationships.”
There are also included services that will allow the clients to buy, sell and hold uninsured digital currency, says the National Credit Union Administration.
“This includes facilitating member relationships with third parties that allow FICU members to buy, sell and hold various uninsured digital assets with the third-party provider outside of the FICU,” says a statement from the NCUA.
Along with looking after the overseas credit unions, The NCUA is also the counterpart of the Comptroller of the Currency (OCC)’s office responsible for regulating national banks.
It also laid down the conditions under which the credit unions can refer other services to the members. Essentially, as per the guidelines, credit unions can refer non-deposit services if they offer risks similar to a credit union. However, the services must be logical to other business activities of the credit union and also be helpful.
Conclusively, the FCIUs are “not limited” and can continue to refer services to its members provided the services should be of “sound judgment and due diligence.” Hence, credit unions are accessible in every sense to refer digital services to the members.
The NCUA also observed that the other U.S. regulators, for instance, CFTC or the SEC, already have some control over crypto activities. It also added that the credit unions “should be cognizant of this fact” while it would “continue to study and address these issues.”
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The NCUA also said that the Federal credit unions would continue to connect their members to third-party services in which services related to digital assets are also included.
As digital technology and assets evolve day by day, more guidance would be necessary, added the NCUA.
Even though only 39% of the population of the United States- about 126 million Americans are members of the credit unions, the development is still a step towards how the financial institutions and banks work with the digital assets.
Earlier, the banks were granted permission to work with stable coins by OCC in 2020. The same year, The SEC and OCC also issued statements that allow the banks to act as custodians of the digital assets.
In June 2021, Texas regulators also allowed the bank in its state to store digital currency for their clients.
The roles of banks would be further evolved in 2022 in the crypto market, suggested the recent statements by the OCC, Federal Reserve, and FinCEN, following inter-agency discussion.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
