WASHINGTON—One year ago a CUNA GAC session on cryptocurrency attracted a standing-room-only audience, with some people turned away at the door. A year later, a less-than-full breakout session on the same subject at GAC reflected the change in enthusiasm around volatile cryptocurrency, as well as greater knowledge among CUs around the issue.
Given the collapse in crypto values, it was noted during the session that CU leaders are learning what “not your keys, not your crypto” means.
The session did reveal there is some growing interest among credit unions for a non-custodial wallet, where members own their crypto and keys from the moment they invest.
“There's certainly fewer crypto Super Bowl commercials today, and I and I say that only half-jokingly. (In 2022) you had 11 crypto Super Bowl commercials, and I’d say by the end of that year half of those companies didn't make it,” Rahm McDaniel, head of banking solutions for crypto platform NYDIG, told attendees. “That’s the classic example of a bunch of investors that looked at what happened and said we're going to take out all of our money.”
McDaniel pointed to all of the empty seats in this year’s GAC session.
“I think there were 300 people in the room last year and I think we even turned away about 100,” he said, recalling being a panelist during the 2022 breakout session. “I think this room is illustrative of the difference between last year and this year.”
Not as Much Curiosity
McDaniel contended what has occurred is there is now less curiosity around cryptocurrency, even as interest remains. But that interest has been muted by the so-called “crypto winter,” he said, adding he believes credit unions understand crypto’s problems have been caused by some poorly run companies and others that were simply unscrupulous.
“Make no bones about it, there have been a lot of bad actors. The kinds of companies without well-designed business models that were poorly capitalized,” McDaniel said. “These companies are getting worked out of the system. It’s just part of the process. But I believe there is a realization that cryptocurrency is not going away. It has genuine utility. And that utility represents both opportunities and threats relevant to this audience in the credit union space.”
McDaniel, whose own company, NYDIG, recently laid off a number of its work force, as CUToday.info reported, said his organization is sound. He added, however, he is glad there are other crypto platforms emerging to work with credit unions, such as Bank Social, saying that provides needed balance.
NYDIG has been the primary company with which credit unions that have waded into crypto have partnered.
Potential for Reputational Risk
McDaniel emphasized he is aware of the reputational risk a credit union takes when it offers a custodial or non-custodial crypto wallet. As CUToday.info has also reported, with a custodial wallet the member does not hold the keys to their crypto, which becomes an issue if the platform fails. If the wallet is non-custodial, members own their crypto immediately and have control over it.
“I talked to a lot of credit unions, both socially and professionally, and when the bad things happened with FTX and others late last year, there were tons of credit union members who called their credit union because they needed help,” McDaniel recalled. “They wanted to get their assets to someplace safe. This is a big member service issue.”
No Concerned Callers
Becky Reed, CEO from $163-million Lone Star CU in Dallas, one of Monday’s panelists, told CUToday.info that her credit union is not fielding any calls from members having concerns over their crypto.
As CUToday.info reported, Lone Star offers a non-custodial wallet through Bank Social. She told CUToday.info the credit union is very pleased with its decision to partner with Bank Social, and the education the credit union has provided its members, as well as the education delivered through Bank Social’s website, has prevented the flood of calls McDaniel said some CUs have received.
https://www.cutoday.info/THE-feature/CU-Offering-A-Non-Custodial-Crypto-Wallet
The Q&A
During the Q&A portion of this week’s session, the majority of attendees’ attention was focused on Reed, and her CU’s choice to go with a non-custodial wallet. Some questions Reed was asked:
- How did she convince her board to get on board with cryptocurrency
- How does the CU educate members on the offering
- How did the CU first realize members were interested in digital money
Other members of the panel were asked what the future of payments might look like with crypto in the mix; whether members’ investments in crypto are insured by NCUA; whether the use of crypto could be expanding outside of just buy, sell and hold.
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