WASHINGTON—With the recent collapse of the
In the wake of FTX's downfall, many credit union leaders received a flurry of calls from concerned members who owned digital assets and needed help transferring them to a safer environment — a majority of which weren't positioned for addressing these needs.
"There's an opportunity for member service that I think is more broadly recognized now than it was this time a year ago and custody is [similarly] a very important topic," said Rahm McDaniel, head of banking solutions for NYDIG, a bitcoin technology and financial services company in New York, in a panel discussion hosted during the Credit Union National Association's Governmental Affairs Conference on Monday.
Institutions that choose to partner with NYDIG — such as the $2.7 billion-asset
But for smaller credit unions lacking the necessary resources for integrating such a product, a different kind of collaboration can also be valuable.
Lone Star Credit Union in Dallas entered a referral program with the Delaware-based crypto exchange BankSocial early last year after member transaction data illustrated how many account holders were purchasing digital currencies and potentially exposing themselves to fraudulent networks.
"We decided, because we are 'resource poor,' that we were going to implement an option that helped our members and was the safest and best option we could afford," said Becky Reed, chief executive of the $165 million-asset Lone Star.
Reed emphasized how boutique credit unions — those she categorized as $250 million of assets or less — can help meet member needs for handling digital assets with a minimal strain on capital, time and other resources.
Experts advise credit unions to not only vet the partners that help them
"Whether you're selling a bitcoin mining machine, or giving people custodial or noncustodial wallets, you need to have very basic consumer protection principles available. … [Which means] making sure you disclose all material terms and making sure that what you say you're going to give is what you give," said Elizabeth Kwok, assistant director in the bureau of consumer protection at the Federal Trade Commission.
"So if you claim 24/7 access to funds, you better have 24/7 access to funds," Kwok said.