Cryptocurrency: What Credit Unions Need to Know

Posted: Oct 13, 2021 | Author: Cornerstone League
blockchain  cryptocurrency  NCUA 

The National Credit Union Administration has called upon credit unions across America to submit comments on digital assets by Oct. 27, 2021. The NCUA board is seeking comments on the current and potential impact of activities related to distributed ledger technology (DLT) and decentralized finance (DeFi) on the credit union system.

Cornerstone League encourages credit unions to consider this issue now, including current and potential use cases for cryptocurrency and issues or obstacles you believe the NCUA board should consider.

Whether your credit union is in the discovery stage or can clearly envision various use cases for cryptocurrency, Cornerstone would like to impart the following information that may help guide you as you compile your comments.

What Is Cryptocurrency?

Cryptocurrency is a digital currency that is created, managed, and protected by a network of computers that use cryptography on a virtual ledger. Many cryptocurrencies are decentralized networks based on blockchain technology.

What Is Blockchain?

A blockchain is a decentralized, immutable ledger of all transactions across a peer-to-peer network. This essential component of many cryptocurrencies collects information in groups—also known as blocks—that hold sets of information. Blockchain technology is not limited to just financial use, but cryptocurrency is the most famous use of the technology.

How Do Consumers Use Cryptocurrency?

Consumers can use cryptocurrency to purchase and sell goods and services or trade them for profit. Just like consumers can purchase tokens to use goods and services at certain companies, a similar concept applies to cryptocurrency, only in digital form.

How Can Credit Unions Use Cryptocurrency?

Credit unions can use cryptocurrency in a variety of ways:

  • Purchase and provide custody services for a digital asset on behalf of customers and directly from their accounts
  • Accept cryptocurrencies as assets
  • Offer crypto-based debit/credit card rewards
  • Offer interest-bearing crypto accounts

For more information on the NCUA’s RFI or to submit your comments, please visit the Federal Register


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