Why Crypto Users are Coming to Credit Unions

Source: American Banker

California-based First Tech is planning to roll out an option for members to buy and hold Bitcoin in a digital wallet through a mobile app. The credit union would inform members of the risks of crypto investing, including the fact that crypto assets won't count as funds insured by the Federal Deposit Insurance Corp. or the National Credit Union Administration.

Several credit unions have already stepped into the fray this year, following regulator approval for third-party crypto servicing, despite the volatility in many currencies' valuations that wiped $2 trillion from the crypto market. But even as credit unions are eager to get involved in cryptocurrencies, many are still unclear on which ones are safe to associate with and how to offer appropriate services. 

Thirty-nine percent of credit union members own crypto, according to a June report from the Credit Union National Association. Only 17% of nonmembers owned crypto, the same report found. 

This affinity for crypto could stem from the same desires that motivate people to choose a credit union over a bank. African American and Hispanic consumers, who had higher crypto ownership rates in the report, are using cryptocurrencies as an alternative to traditional banking or payment services, said Ligia Vado, senior economist at CUNA.

Hispanic voters led in ownership at 48%, compared with 36% of Black respondents, 25% of Asian respondents, and only 22% of white respondents saying they owned any crypto. "When it comes to racial disparities in adoption of cryptos, one of the main reasons is that African Americans and Hispanics tend to have less trust in mainstream finances," Vado said.

Among Hispanic Americans, cryptocurrency has already gained wider adoption due to government-sponsored growth of those markets in Latin American countries, Vado said. In many cases, governments are promoting the use of stablecoins, which attempt to tie their valuations to a government-issued currency to avoid the volatility that Bitcoin and other cryptocurrencies experience.