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Recent collapses of cryptocurrency exchanges show that—while this technology is new, exciting, and filled with possibilities—dangers still exist. These collapses also show that the current way of doing things in this field isn’t going to cut it.
Cryptocurrency is an exciting look into the future of finance, combining the latest technology with the ability for consumers to be involved like never before.
Exchange collapses add massive uncertainty into a market already filled with potential for extreme value swings. These platforms have demonstrated firsthand the danger of unregulated, unsupervised financial services.
So how do we get the best of both worlds — to take advantage of this innovation while protecting consumers?
The answer is twofold: 1) create a strong regulatory regime to oversee digital currencies and related activities; and 2) enable consumer-friendly institutions such as credit unions to offer digital asset services.
The collapse of these cryptocurrency exchanges shows the danger lies not necessarily in the technology itself, but in misrepresentation and false statements to potential customers regarding everything from reserves to insurance status.
This has been allowed to happen because these companies take advantage of loopholes to gain the benefits of regulated institutions without offering any of the protections provided by regulation and oversight.
Congress—along with federal regulators—must ensure these companies cannot continue to operate in this manner. Laws and regulations must be designed to keep up with the continued evolution of these technologies.
And when it comes to current laws and regulations, credit unions comply with dozens of them at the federal, state, and local level every day. They’re designed to keep consumers safe, their data protected, and their funds secure through well-run financial institutions.
When it comes down to an offshore-based cryptocurrency exchange, or your community credit union where you have accounts and a car loan, which would you choose?
CUNA’s 2022 National Voter Survey shows credit union members trust their financial institution to look out for their best interests.
Credit unions are the original consumer protectors. We put our members first because our members are who we answer to.
We’re a natural partner for consumers looking to enter the crypto space, we’re not about profits or meeting shareholder needs, we simply want to offer the services our members want in a safe and affordable way.
White House research shows 16 percent of adults in the U.S. are engaged with cryptocurrency. CUNA’s data shows 39 percent credit union members are engaged with cryptocurrency, and 59 percent of credit union members between ages 18 and 34.
These are consumers who are interested in exploring the possibilities of digital currencies, and also trust their credit union to meet their financial needs. It’s a natural partnership.
A strong cryptocurrency regulatory regime would go a long way toward restoring confidence and allowing credit unions the chance to stay on top of the latest payments technology.
Additional flexibility for credit unions to offer digital asset wallet services would ensure consumers can explore this new, exciting technology in a safe way.
At the end of the day, consumers can’t afford for this industry to continue as it’s been. Consumers need a safe entry point to this market, and credit unions are the perfect partner.
Jim Nussle is the president/CEO of Credit Union National Association.
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