Credit unions are reportedly looking for regulatory approval to hold crypto assets

• Credit unions in the US are looking to hold crypto assets following a regulatory guidance letter, Bloomberg reported.
• The National Credit Union Administration said credit unions can work with third-party providers of crypto services.

Credit unions around the US are seeking approval to hold crypto assets like bitcoin, with the move following regulatory clarification that they can offer cryptocurrency services by teaming up with third parties, according to a Bloomberg report.

Credit unions with federally insured deposits can work with third-party providers of crypto services to allow their members to purchase, sell, and hold digital assets if certain conditions are met, the National Credit Union Administration said in a letter published last week.

The guidance gives credit unions the assurance to form partnerships, clarifying what many thought has been possible under existing rules, Lance Noggle, senior director of advocacy for payments and cybersecurity at the Credit Union National Association, told Bloomberg in a report published Tuesday.

A larger aim for credit unions is to provide crypto services directly to their members in the same way banks are able to do so for their customers, said Noggle. In July 2020, the Office of the Comptroller of the Currency as the regulator for banks gave them the approval to offer custody services for cryptocurrency. It more recently said banks must first obtain written permission from their supervisory office.

The National Association of Federally-Insured Credit Unions is also seeking explicit approval for credit unions to provide cryptocurrency custody services, Bloomberg reported.

The National Credit Union Administration said in its letter that it will evaluate a federally insured credit union's relationship with third parties offering crypto services and related technologies in the same manner as all other third-party relationships.

"This includes a FICU exercising sound judgment and conducting the necessary due diligence, risk assessment, and planning when choosing to introduce or bring together an outside vendor with its members," NCUA wrote.

The cryptocurrency market this year has soared in valuation terms as the adoption of crypto services and exposure by institutions and retail investors has accelerated. The market was valued at around $2.4 trillion as of Thursday after hitting a $3 trillion valuation in early November.