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While cryptocurrency has existed for more than a decade, there’s still room for credit unions to be involved in these digital assets, which now exceed $2 trillion in value, says Larry Pruss, senior vice president at Strategic Resource Management.
The first step toward getting involved in cryptocurrency is making sure the board and senior management know what it is and are aware of the risks involved, Pruss told attendees of a CUNA Council virtual roundtable, “Building Cryptocurrency Knowledge Together.”
Cryptocurrency, he explains, is a digital asset designed to work as a medium of exchange or store value. It exists on a decentralized digital ledger known as blockchains, “similar to what the internet is for emails or what railways are to trains. Blockchains are the rails and trains are the crypto.”
The value of cryptocurrencies reached roughly $3 trillion at one point in 2021. Pruss says the number of cryptocurrency wallets rose from 50 million to 70 million in the past year.
There are about 20,000 cryptocurrency ATMs, where people can buy or sell cryptocurrencies.
A Visa survey revealed that 94% of household decision-makers are aware of cryptocurrency and 33% own crypto. Eighteen percent said they’re likely or very likely to switch banks based on crypto services.
While Bitcoin is the most well-known cryptocurrency, there are thousands in existence, including Ethereum, Litecoin, and Cardano.
Financial regulators have weighed in on cryptocurrency. CUNA believes Congress should look for ways to enable credit unions to provide digital asset services so regulators can provide proper oversight.
Digital currency is especially attractive to younger consumers, says Ron Hammond, director of government relations with The Blockchain Association.
Three-quarters of global financial executives believe failing to provide digital asset services will harm them competitively, according to a 2021 Deloitte study. These services include holding keys for members, trading on mobile devices or online banking, creating rewards programs, and issuing stable coins.
Adopting cryptocurrency services can help credit unions engage consumers, Pruss says, noting that PayPal more than doubled its engagement a month after announcing its crypto product.
Related: Ignore cryptocurrency at your peril