BOSTON — Credit union executives remain cautious about offering cryptocurrency services even as younger members increasingly own digital assets and show interest in using them for payments, according to new research from PYMNTS Intelligence and Velera.
The report, “Credit Unions Sit on the Sidelines While Members Already Own Crypto,” is based on a March survey of 500 U.S. credit union executives and examines their views on member demand for cryptocurrency and stablecoins, as well as their institutions’ plans, readiness and concerns.
Researchers found cybersecurity and fraud risks are the biggest barriers to offering both cryptocurrency and stablecoin services, with more than half of executives citing those concerns.
Operational & Security Issues
Regulatory concerns ranked lower, suggesting many of the obstacles credit unions identify involve operational and security issues that institutions can address internally, according to PYMNTS Intelligence and Velera.
The findings also indicate credit unions are more likely to invest initially in education and risk management than in products that directly expose members to digital assets.
Fifty-nine percent of executives expect their credit unions to offer cryptocurrency education within three years, while 53% anticipate developing fraud-prevention and compliance tools. Just 22% expect to offer cryptocurrency rewards during that period.
Stablecoins could gain traction sooner for back-office and payment applications, the research found.
Other Issues Identified
Credit union executives identified 24-hour settlement, domestic payments, tokenized deposits and business payments among the strongest potential stablecoin applications. Those uses could allow credit unions to gain experience with digital assets without initially introducing consumer-facing cryptocurrency products.
The study found credit unions also differ considerably in their readiness to adopt digital assets. Some institutions are developing expertise through pilot programs and partnerships with outside companies, while others have the technological capabilities but are waiting for stronger member demand or support from leadership.
The Risk of Waiting
PYMNTS Intelligence and Velera cautioned that waiting too long could carry risks of its own.
Members unable to obtain cryptocurrency-related services from their credit unions could turn to other financial-services providers, potentially weakening the institution’s relationship with those members.
The researchers said credit unions do not necessarily need to introduce a broad suite of cryptocurrency services immediately. Instead, institutions can begin preparing through member education, stronger fraud controls and development of strategies for future digital-asset payment applications.
