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Written by Cyndie Martini
on December 13, 2022

Should credit unions consider offering cryptocurrency-related services? Maybe the better question is, why not? Banks are already in this game. If credit unions are always playing catch up to banks, it's likely time to start implementing crypto services rather than just thinking about them.

Implementing crypto services doesn't mean your credit union has to become a crypto trading platform. Currently, there aren't any banks offering that level of crypto service. However, it is probably coming in the future. Banking crypto services are fairly limited, but at least they are meeting some demand and showing customers that crypto is part of the services suite.

Current crypto implementations for banks are mostly some level of light integration with crypto exchanges. Some banks go a level up and provide direct Bitcoin and Ether transfers. One bank, BNY Mellon, provides crypto custody services. Other services include bank card rewards in crypto.

Given the recent bankruptcy of FTX, the obvious question arises — what about the risks? Financial institutions are heavily regulated in the US, but many crypto exchanges aren't. However, those in the US are far more regulated than those outside the US. But not at the same level as US financial institutions.

Banks working with crypto exchanges stick with only US-based and regulated exchanges such as Coinbase. In some cases where coins are transferred to/from the bank or reside under the bank's custody, FDIC insurance may be provided. While not as secure as common US financial transactions, it is far more secure than non-US-based crypto exchanges. It also adds another layer of security to US-based crypto exchange interactions.

For credit unions, some initial implementations might be a link to a partner platform such as Coinbase. Or the ability to transfer Bitcoin and Ether directly. These are popular primary coins (vs. more risky altcoins). Of the two implementations, direct transfers likely require more work since it is a deeper level of integration. But it is a way to start stepping into crypto services and showing customers that your credit union is serious about providing crypto services.

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