A growing interest in cryptocurrencies has been seen amongst consumers, most of whom understand what cryptocurrencies are. However, the number of financial institutions willing to offer their members or customers cryptocurrency services is decreasing.
Lou Grilli, senior innovation strategist at PSCU, told PYMNTS that the fluctuations in value which once made cryptocurrencies exciting have stabilized, making them more attractive and similar to an alternative investment such as gold.
The October “Credit Union Tracker®,” a collaboration with PSCU, revealed that 3 out of 10 consumers surveyed hold crypto, with the number of credit union (CU) members holding crypto increasing by 2%. According to Grilli, “interest has not died off”. This is because there are still crypto day traders trying to time the market, and in countries with high inflation and a devalued currency, people are turning to cryptocurrencies denominated in the U.S. dollar.
Credit union members expect their institutions to provide trust, convenience, and a frictionless experience. Therefore, offering cryptocurrencies is a strategy for credit unions to remain competitive and give their members access to innovative services.
In 2021, federal regulators gave CUs the green light to partner with cryptocurrency providers, enabling their entry into this dynamic market. Credit unions can offer their members a safer alternative to Coinbase or FTX as their money is more secure. In addition, CUs can benefit from ancillary opportunities, such as attaching onto a member’s crypto holdings if they are in arrears on an auto loan.
Regulatory support from the National Credit Union Administration (NCUA) encourages credit unions to be innovative, try new things, and avoid unnecessary risks. Therefore, offering crypto services is much safer than other alternatives.
In order to compete successfully with larger banks, credit unions must educate their members on the risks and rewards associated with cryptocurrencies. This education should be ongoing and provided through various channels, with member-facing staff playing an important role in recognizing and preventing cryptocurrency-related scams.
Credit unions are also able to leverage blockchain technology to offer efficient and cost-effective money movement, making cross-border payments more accessible for their members. In addition, smart contracts can be used to digitize property titles and manage digital identities.
By educating members, strengthening security measures, and utilizing blockchain technology, credit unions can shape a promising future in the cryptocurrency space while protecting their members’ financial interests.