Cryptocurrency: Jump in or wait and see?
The benefits and challenges of offering crypto services.
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While cryptocurrency is a hot topic among consumers and financial institutions, offering crypto services isn’t a priority for most credit unions at this point, according to panelists at the 2022 Co-op THINK Conference.
According to 2021 research from Cornerstone Advisors, 79% of financial institutions have no plans to offer cryptocurrency services, says Dean Michaels, Co-op Solutions’ chief strategy officer. He notes, however, that such data is evolving.
“You can look innovative and differentiated if you support crypto today,” says Michaels. “There’s also a potential source of income from the transactions of buying, selling, and holding crypto. The obvious benefit is that you keep deposits in your institution.”
He notes that credit unions offering crypto services provide only buying and selling services and hold the assets through a third-party. Consumers using these services have not yet made payments with cryptocurrency through their credit unions.
Tiana Laurence, who runs a venture capitalist firm that specializes in cryptocurrency, says credit unions are positioned as trusted service providers within the financial services industry.
“Credit unions were created and exist to protect assets and hold them,” she says. “You’re safeguarding people's value. Your members are probably going to look to you more for asset management rather than payment services.”
Credit Union of Southern California in Anaheim, Calif., took a “wait-and-see” approach to crypto after surveying its membership and studying transaction data, says Sevan Yakinian, senior vice president of member services and payment systems at the $2.1 billion asset credit union.
“We’re seeing about 9,000 unique users of crypto services,” he says. “Just for perspective we have about 130,000 members. It is significant. But we’re not seeing it in surveys. It’s just not something our members have asked for. By way of example, they’re always looking for more person-to-person payments options.”
Yakinian says Credit Union of Southern California has considered offering crypto as an ancillary benefit for members.
“We would love to tie it to rewards with checking or cards, where they could approve crypto coins that way,” he says. “In that scenario they’re not investing thousands of dollars and worrying about losing 20% of their value overnight.”