Deloitte, Credit Unions Call for Digital Asset Regulatory Clarity

The National Credit Union Administration asked for opinions on how to approach digital assets, and credit unions said they are ready for a seat at the table. 

The NCUA, an independent federal agency responsible for overseeing the United States’ roughly 6,000 federally insured credit unions, issued their formal request for information (RFI) about how financial institutions can and will interact with cryptocurrencies on September 23.

Credit unions are not-for-profit financial institutions that provide basic financial services for their members including the provision of credit and deposit accounts. In the US, credit unions control more than $1.8 trillion in assets. 

The deadline for submission of reports from interested parties was September 27. In response to the RFI, Deloitte, The National Association of Federally-Insured Credit Unions (NAFCU) and Visions Federal Credit Union submitted comments for consideration. 

“There is growing evidence that Distributed Ledger Technology (DLT), Digital Assets, and other related technologies can enable revolutionary efficiencies in the delivery of payments, banking, and other financial services,” Deloitte wrote in its comment. 

Decentralized finance (DeFi) offerings have increased in the last year, Deloitte mentioned, pointing to the growth of exchanges and products, including collateralized lending and stablecoins. Stablecoin circulation has grown to over $100 billion, with many transactions costing less than one cent, Deloitte’s comment noted, but regulatory clarity is needed. 

“However, this more competitive landscape for financial services assumes enhancements to regulation that would bring DeFi applications out of the financial shadows and allow them to interoperate with existing financial infrastructure within the banking system,” Deloitte’s comment read. 

NAFCU and Visions acknowledged digital assets’ immense growth, and also called for immediate action on the regulatory front that would allow credit unions to get involved in the space. 

“The present regulatory uncertainty results in individual credit unions suffering millions of dollars in net share account outflows to largely unregulated, opaque entities and members being exposed to substantial risks that can be better monitored, assessed, and resolved by credit unions,” NAFCU wrote in its comment. 

Both NAFCU and Visions requested that the NCUA “promptly issue a letter to credit unions” allowing them to participate in the crypto ecosystem. 

“Visions asks that NCUA promptly issue a letter to credit unions confirming that we can directly, or in partnership with a third-party vendor, host a digital wallet capable of facilitating a member’s buying, holding, or selling of digital assets, most especially bitcoin,” the credit union wrote in its comment. 

The credit unions also asked for permission to partake in a range of other crypto activities, including staking, collateralized lending, and offering debit and credit cards backed by digital assets. 

In March 2021, NCUA Vice Chairman Kyle Hauptman first called for the agency to take after the Office of the Comptroller of the Currency (OCC), which oversees US banks, and take a greater stance on cryptocurrency regulation, particularly with regard to stablecoins. 

“NCUA may want to look at the actions taken by another regulator, the OCC,” Hauptman said during a speech in March. “Stablecoins, as you may know, are cryptocurrencies designed to minimize price volatility, and the OCC’s guidance moves the U.S. closer to the real-time payment systems already used in other countries.”

The NCUA’s next board meeting is scheduled for October 21, when it is expected that regulators will review submitted comments.