US Credit Union Regulator Wants to Know How Its Firms Handle DeFi
The NCUA is asking credit unions to weigh in on how they are interacting with DeFi and DLT.
The National Credit Union Administration (NCUA) is formally looking for more information about how the financial institutions it regulates can interact with the crypto industry.
The NCUA published a request for information (RFI) on Thursday after its three board members unanimously voted in favor, asking how distributed ledger technology (DLT) and decentralized finance (DeFi) might affect the credit union system and how its regulated entities might interact with either of these technologies or other crypto-related tools.
The NCUA is a federal U.S. regulator overseeing credit unions, acting as a counterpart to the Office of the Comptroller of the Currency (OCC), which regulates national banks.
With this, every major federal banking regulator is now looking at crypto. In addition to the NCUA and the OCC, the Federal Deposit Insurance Corp. (FDIC) published a RFI in May asking similar questions about crypto, while the Federal Reserve is seeking feedback on a proposal to allow fintech and crypto firms to have access to its master accounts.
There’s also growing scrutiny of digital assets from regulators, with stablecoins and securities-backed tokens in particular starting to garner attention. The OCC, the Fed and the FDIC are also forming an interagency team to examine crypto.
In its RFI, the NCUA asked about insurance, risk/compliance, operations, supervision and related areas where the NCUA might be involved if a credit union wants to offer a crypto-related service.
The RFI also included a question about stablecoins and how those accounts might be insured.
The general public – including individuals who may not directly be part of a credit union's compliance team – has 60 days after the document is published in the Federal Register, the nation's logbook, to weigh in on the questions.
NCUA Vice Chairman Kyle Hauptman first called for his agency to take a look at crypto earlier this year. He pointed to the OCC’s work in letting national banks interact with stablecoins and provide custody services for cryptocurrencies as a potential example for credit unions, though he said any NCUA guidance might not match up exactly with the OCC.
“At some point, we’ll speak with NCUA staff about doing a side by side with what the OCC did and see what we do or don’t want to adapt for credit unions. NCUA benefits a bit from ‘somebody else went first,’ so we can, where appropriate, build on the OCC’s experience,” he told CoinDesk in March.
In a statement about the RFI on Thursday, he likened the crypto industry to the internet in the mid-1990s, and said early action by the NCUA could help ensure credit unions don't have to play catch-up at a later date.
"The U.S. is in a race to be the center of this new industry, much the way this country did so well with the internet economy," he said. "While I’m a Republican, I feel compelled to mention that one reason America dominated the internet industry is because, 25 years ago, Bill Clinton’s White House published principles that said the government will not interfere with the growth of this new technology. Millions of Americans have jobs today due to that early guidance from the federal government."
UPDATE (July 22, 2021, 15:45 UTC): Updated with comments from NCUA Vice Chairman Kyle Hauptman.
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