On Thursday, the National Credit Union Administration (NCUA) noted in an announcement that federally insured credit unions (FICU) can form partnerships with third-party digital asset service providers.
NCUA is a US-based national independent agency that oversees credit unions and provides deposit insurance to depositors of US deposit institutions together with the Federal Deposit Insurance Corporation (FDIC). While NCUA supervises federal credit unions, FDIC supervises commercial banks and savings institutions.
According to NCUA’s announcement, the regulator aims to offer clarity on regulations building relationships between credit unions and third-party digital asset providers. FICU can now “buy, sell, and hold uninsured digital assets with the third-party provider outside of the FICU.”
The announcement read:
“A FICU’s relationship with third parties offering these services and related technologies will be evaluated by the NCUA 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.”
In addition, FICUs are responsible for establishing “effective risk measurement, monitoring, and control practices” with digital asset service providers.
In July of this year, NCUA released a request for information distributed ledger technology (DLT) and decentralized finance (DeFi) may impact the business model of credit unions. Banking regulator The Office of the Comptroller of the Currency (OCC), has also introduced a licensing system that allows cryptocurrency companies to provide banking services.