February 15, 2022

NAFCU urges SBC to include CUs in digital asset reg framework 

Capitol HillNAFCU Vice President of Legislative Affairs Brad Thaler wrote to the Senate Banking Committee ahead of its hearing to review the President’s Working Group (PWG) on Financial Markets’ report on stablecoins, cautioning the committee on how a lack of a clear regulatory environment and appropriate supervisory framework poses risks to the adoption of otherwise promising technologies, such as digital assets.

Similar to the letter Thaler sent ahead of the House Financial Services Committee hearing, Thaler noted that while the report on stablecoins represents a crucial first step towards bringing rules and regulation to emergent stablecoin adoption, the report adopts and cites the Federal Deposit Insurance Act's definition of an insured depository institution, which does not include credit unions.

"By adopting this narrow definition, which includes banks and savings associations but not credit unions, the Report risks legislators and other regulators interpreting the Report as recommending that Congress enact legislation requiring a stablecoin issuer to obtain a bank charter – not either a bank charter or a credit union charter," wrote Thaler. "This arbitrary approach, if left unchecked, will result in competitive disadvantages, market distortions, and reduced innovation by excluding an entire class of federally insured and comprehensively supervised depository institutions from new markets for innovative products and services."

Thaler urged Congress to search for alternative ways to provide regulatory certainty and parity across financial services systems and ensure a level playing field for all. "We urge you to ensure the needs of credit unions are considered in any legislative approach you consider in the future," concluded Thaler.

NAFCU President and CEO Dan Berger previously wrote to Treasury Secretary Janet Yellen to point out the risks of excluding credit unions from the legislation requiring all payment stablecoin issuers to be insured depository institutions.  

In addition, Berger has urged the NCUA to take action on digital asset issues to ensure credit unions are not left behind as federal financial regulators move toward foundational federal digital asset regulation and legislation.

Read the full letter. NAFCU will continue to engage Congress, the Treasury Department, the NCUA, and other federal financial regulators to call for credit unions to be granted the ability to engage with digital assets on equal footing with banks.