Crypto offers UC great opportunities and obstacles

It’s time for credit unions to make sure they know how to talk to their members about crypto, according to a leading credit union service organization (CUSO).

That’s why PSCU, which supports more than 1,900 financial institutions representing nearly 7 billion transactions a year, is rolling out a major initiative to both train credit union (CU) staff and help them train their members in turn.

“Educating members about crypto is a key goal,” Lou Grilli, senior innovation strategist at PSCU, told PYMNTS. “This landscape is changing so rapidly. There is more interest now than before, despite this crypto winter we are in.

That doesn’t mean all UCs will offer crypto services, Grilli said, noting that’s a decision each institution must make on its own. But there’s more to it, especially for UCs.

“The relationship that credit unions have with their members is one that credit unions tend to capitalize on,” Grilli said. “And rightly so. Credit unions have seen some of their members get scammed by fake websites, fall for phishing scams, succumb to fake ads for a better way to buy bitcoin. And that’s where the need for education… really becomes paramount.

Trust above all

Either way, the way to “maintain the level of trust that credit unions have with their members, that members have with their financial institution” is to provide sound, knowledgeable advice, he said. .

So, he added, “This really is the optimal time for credit unions to educate themselves and their members about digital assets” — a broad term that Grilli says not only covers the bitcoin, ether and other cryptocurrencies, but also stablecoins, central bank digital currencies. , non-fungible tokens, and even core blockchain technology.

“This subject has its own language and this language is not native to people in banking,” he added. “It’s equally important, perhaps more important, that credit union staff know the risks, the terminology, and the different coins and different types of digital assets that have been in the news lately.”

To that end, PSCU and its innovation team have created a microsite, which covers everything from general industry topics that affect credit unions to regulatory updates. It also means ensuring that members know what they are potentially getting into and that they are not investing more than they can afford to lose.


A small number of PSCU credit unions currently want to go all the way and offer the ability to buy and trade cryptocurrencies directly from their apps or websites, but Grilli believes this will increase as the regulation will bring clarity.

While benefits include keeping members away from fraudulent sites and offering better fees, PSCU’s own debit card data shows customers are still buying crypto, he said.

“We see the exit…to exchanges,” Grilli said. “And even though we are in a crypto winter, it hasn’t stopped. It slowed down a bit, but it didn’t stop.

Beyond that, Grilli said anecdotally, there are signs that smaller businesses are interested in accepting point-of-sale crypto. At least one UC that has been at the forefront of offering crypto education found that these members “wanted to know if their credit union could offer point-of-sale crypto acceptance,” he recalled.

Another interesting trend the PSCU is starting to see, Grilli said, is that some “credit unions are starting to ask about a member’s digital assets in loan applications.”

This means bitcoin, ether, dogecoin and other crypto assets can be considered alongside stocks and savings “when assessing members’ ability to repay a loan,” he said. declared. This does not mean that they are accepted as collateral, which is not allowed.

This inability to access credit from lenders in general is something that has been a hot topic for crypto owners who don’t want to sell their holdings but want to buy big-ticket items.

Very rewarding

One popular crypto offering CUs are turning to is crypto rewards programs, like the one PSCU has rolled out as an option in its credit card rewards program, Grilli said.

“It integrates well with other redemption options,” like gift cards, cash back, and hotel and airline points.

“Many credit unions are looking to offer rewards, especially credit card cash back in the form of the member’s preferred cryptocurrency because in this case it’s more like found money,” did he declare. “It seems a little less risky…and members see it as a way to get their toes in the water,” just to see what the crypto craze is all about.

More importantly, “it shows that the credit union is progressive,” Grilli added. “They meet the member where the member wants to be.”

Obstacles remain

Still, Grilli sees three main obstacles to wider adoption of crypto as a means of payment – ​​notably via crypto debit cards that allow users to spend their crypto in person or online, while the merchant is paid in person. species.

First, he said, there is a lack of widespread adoption by merchants.

Second, with most crypto owners buying in 2021 or early 2022 underwater, people are less eager to spend their crypto at the bottom of the market, Grilli said.

Third, there is the issue of taxes, which remains one of the main barriers to wider adoption of crypto, especially for its use in payments.

“Whenever you trade crypto, you are obligated to report your gains or losses to the IRS” as a potential capital gain, he said. “Buying a cup of coffee every week with crypto means a lot of news coming April 15th.”

bring certainty

To some extent, what happens next is highly dependent on elected officials and regulators drafting a regulatory framework for the crypto industry – which, by and large, does not yet exist.

Meanwhile, Grilli said federal banking regulators like the Office of the Comptroller of the Currency and the Federal Reserve are wary. However, the process has begun in earnest in Congress and will accelerate when federal agencies make their recommendations under President Biden’s Executive Order on Crypto. It’s due this month.

Grilli has high hopes for this legislation, saying that while it can “offer security, but without sacrificing innovation”, cryptography, stablecoins and distributed ledger technology (DLT) – the basis of blockchains – “offer enormous potential for money movements”.

However, this innovation requires secure rails and reliable stablecoins, Grilli said.

So far, Grilli said, the National Credit Union Administration (NCUA), which is the regulator of federally insured credit unions, has been surprisingly progressive in this area.

In December, he published the first of two letters of advice which stated that “digital asset services are absolutely not prohibited, as long as they provide full disclosure to their members”, although Grilli added that they could not keep these assets for customers.

See Also: NCUA Tells FICUs Crypto Trading Is OK – If Big Exchanges Provide the Service

The second, he said, allows credit unions to work with blockchain and DLT providers.

That’s not to say they’re encouraging on the matter, but rather emphasizing due diligence and risk assessment while using language like “not banned.”

And in any case, many credit unions will want to wait until regulations are clear and regulators are more supportive. But there are still plenty of reasons to get ahead of the curve when it comes to training staff and preparing to train members.

For all the PYMNTS crypto coverage, subscribe daily Crypto Newsletter.

New PYMNTS Study: How Consumers Use Digital Banks

A PYMNTS survey of 2,124 US consumers shows that while two-thirds of consumers have used FinTechs for some aspect of banking, only 9.3% call them their primary bank.

We are always looking for partnership opportunities with innovators and disruptors.

Learn more

Comments are closed.