SOURCE: IPO INFO
In an open letter to credit unions, the NCUA stated that they might “purchase, sell, and keep certain uninsured digital assets with [a] third-party source outside of the federally insured credit unions.”
The organization stated that the action was made to “give clarification” to unions and that it “does not preclude [credit unions] from creating these ties,” rather than actively supporting them.
It did say, though, that unions will have to make sure their partnership agreements fit specific criteria, and that “the authority for unions” to “create these ties will be determined by the laws and regulations of their respective states.”
The body spoke of the need to exercise “sound judgment” and “conduct the necessary due diligence, risk assessment, and planning when choosing to introduce or bring together an outside vendor with its members.”
It also said:
“The NCUA will consider a [union’s] relationship with third parties delivering [crypto-related] services and associated technology in the same way it evaluates all other third-party interactions.”
When introducing or bringing together an outside vendor with its members, the organization stressed the importance of using “good judgment” and “doing the requisite due diligence, risk assessment, and planning.”
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According to the report, unions should “develop adequate risk measuring, monitoring, and control methods for such third-party relationships,”.
Further “advice” will most likely be introduced at a later date, according to the body, which stated:
“With the continuous expansion of digital assets and the technology that make them available, the NCUA anticipates that more guidelines may be required.” […] This new guideline was a critical step in clarifying the credit unions’ current jurisdiction.”
However, it stated that the new advice “provides new revenue potential in the digital asset marketplace” for credit unions, noting that demand has “only continued to grow as regular customers are offered with easy access to cryptocurrencies and other digital assets.”
The news would have come as a relief to companies like NCR and NYDIG, who announced a collaboration in the summer of this year to allow about 24 million consumers at 650 US banks to buy and sell bitcoin (BTC) through NCR mobile apps while also using NYDIG’s custody services.
Because the NCUA insists on “sound judgment,” “due diligence,” and “risk assessment” methods, only significant (and highly compliant, well-insured) companies in the crypto custody industry will likely meet the regulator’s requirements.