WASHINGTON—Ahead of this week’s Senate Agriculture, Nutrition, and Forestry Committee hearingon digital assets, NAFCU and CUNA each sent letters to the committee addressing credit union concerns regarding cryptocurrency.
NAFCU’s Vice President of Legislative Affairs Brad Thalerurged the committee to ensure that the needs of credit unions are met as CUs continue to integrate these technologies into the market.
“NAFCU appreciates the Committee examining the risks, regulation and innovation of digital assets,” the letter states. “Recent years have seen increased interest in cryptocurrencies, with prices reaching new highs as well as experiencing pull backs.”
In the letter, Thaler mentioned that although the integration of digital assets provides great opportunities for financial institutions, he also emphasizes that “the absence of a clear regulatory environment and appropriate supervisory framework poses risks to the adoption of these otherwise promising technologies.”
Thaler concluded the letter by requesting that credit unions are considered in any legislative approach the committee should consider in the future.
CUNA: ‘Significant Concern’
In its letter, CUNA stated credit unions have significant concern with the potential for cryptocurrency and digital asset platforms to exploit regulatory loopholes if not subject to substantial regulation.
“Credit unions are subject to significant consumer protection and safety and soundness regulation,” the letter reads. “However, the crypto and digital currency sectors operate largely outside of the traditional financial safeguards and generally without the stabilization and protections that financial intermediaries generally provide. In fact, the fundamental innovation of cryptocurrency is the elimination of the financial intermediary.
“Unfortunately, when there is no financial intermediary, the functions that they provide also are lost, presenting users of this technology with significant risk,” the letter adds.
‘Exploration’ Needed
The letter also argues that innovative technologies should not change the government’s role in overseeing an industry that uses them.
“Congress should explore ways to regulate the delivery of financial services using digital currencies to ensure that consumers are protected in the same way if they received financial services from a financial institution,” the letter reads. “Furthermore, Congress should look for ways enable credit unions and other financial institution to provide digital asset related services, so that these services can be properly overseen by Federal regulators.”
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