Digital Assets, Ledger Technology Need 'Substantial Regulation'

Credit unions have significant concerns with the potential for cryptocurrency and digital asset platforms to exploit regulatory loopholes if not subject to substantial regulation, CUNA wrote to the House Financial Services Committee Tuesday.

“Credit unions are subject to significant consumer protection and safety and soundness regulation,” the letter reads. “However, the crypto and digital currency sectors operate largely outside of the traditional financial safeguards and generally without the stabilization and protections that financial intermediaries generally provide. In fact, the fundamental innovation of cryptocurrency is the elimination of the financial intermediary.

“Unfortunately, when there is no financial intermediary, the functions that they provide also are lost, presenting users of this technology with significant risk,” it adds.

The letter also notes that innovative technologies should not change the government’s role in overseeing an industry that uses them.

“Congress should explore ways to regulate the delivery of financial services using digital currencies to ensure that consumers are protected in the same way if they received financial services from a financial institution,” the letter reads. “Furthermore, Congress should look for ways enable credit unions and other financial institution to provide digital asset-related services, so that these services can be properly overseen by Federal regulators.”

Related: CUNA Writes HFSC Seeking Consumer Protections Related to Digital Currencies; Opportunities for CUs, FIs to Offer Digital Asset-Related Services
Related: US DOJ Seizes $3.6 Billion Worth in Bitcoin Linked to 2016 Bitfinex Hack