Last year, the U.S. saw the passage of the GENIUS Act, which implemented the first federal regulatory framework for stablecoin issuers. Part of the Act required that federal agencies develop an implementation framework for regulated entities such as credit unions. To that end, the National Credit Union Administration (NCUA) has developed and proposed the first step towards stablecoin implementation within the credit union industry.
The rule is a first step in the NCUA’s process for implementing the requirements of the GENIUS Act. In the words of current Chairman Kyle Hauptman, “[t]his proposed rule is the first step in NCUA’s implementation of the GENIUS Act. We’re on track to meet the Congress’ July 18 deadline. Credit unions should be aware that they won’t be at a disadvantage versus other entities, whether in timing or standards.”
The NCUA’s proposal centers around licensure requirements for Credit Union Service Organizations (CUSOs), service organizations, subsidiaries, and intermediaries. Some of those requirements include anti-money laundering (AML) and economic sanctions, qualification requirements, filing requirements, scope of investigations for potential applicants, etc.
In addition to publishing the rule, the NCUA has released its Financial Technology and Digital Assets resources page. The page is dedicated to providing credit unions with information on “emerging and innovative financial technologies, including artificial intelligence and digital assets.”
As credit unions work to understand the NCUA’s implementation of the GENIUS Act, a good thing to keep in mind is that digital assets are not subject to share insurance. As stipulated by the NCUA, the following items are not covered by share insurance:
Additionally, credit unions that are working with a CUSO or other appropriate stablecoin issuers to enter the digital asset market should review internal third-party vendor due diligence procedures. Credit unions may also need to be prepared to reevaluate risk parameters and determine the extent of exposure present before working with stablecoin issuers.
Have questions or want to know more? Email us at compliancesupport@viclarityus.com.
Provided by ViClarity.
For more information, email Heather Line.
Your League-member benefits include the Compliance Hotline — providing exclusive access to dedicated compliance experts:
Using the above phone number and email address, you can gain access to a knowledgeable team that’s ready to address all your credit union’s compliance inquiries — promptly and efficiently. With the Compliance Hotline, you can proactively respond to impromptu questions and issues by getting clarity and insight on technical topics that normally slow you down. We want to help you unlock the full potential of your League membership by leveraging the resources and support you need to navigate the complex world of compliance effortlessly. We’re ALWAYS just a phone call or email away!
Additionally, other League-member compliance resources include:
Powered by ViClarity, a California’s Credit Unions and Nevada’s Credit Unions company.
