(July 23, 2021) In other action Thursday, the NCUA Board issued a request for information on digital assets and related technologies, with a particular eye on current and potential uses for credit unions and the risks associated with them.
In issuing the RFI, NCUA said it wanted to engage the credit union system and other stakeholders and learn how emerging distributed ledger technology (DLT) and decentralized finance (DeFi) applications are viewed and used. In particular, the agency said, it wants feedback on the role NCUA can play in “safeguarding the financial system and consumers in the context of these emerging technologies.”
“The accelerating pace of change information technology brings, coupled with the widespread diffusion of computing power and the growing importance of networks, is raising new opportunities and challenges,” the agency said. “In order to continue to fulfill its mandate to maintain a safe and sound credit union system and protect credit union members, the NCUA is working to better understand the implications of these changes and the associated benefits or challenges that may exist.”
The agency described DeFi as the broad category of applications adopting peer-to-peer networks to create digital assets like cryptocurrency and crypto-assets, clearing and settlement systems, identity management systems, and record retention systems. DLT (which includes blockchains) consists of a shared electronic database where copies of the same information are stored on a distributed network of computers.
Comments will be due in 60 days after publication in the Federal Register.
In a late development, the agency board dropped consideration of its 2022-26 strategic plan for this meeting (which it announced in a press release the day before the board meeting). Given that there will be no August NCUA Board meeting, the earliest the strategic plan could reappear on the board’s agenda would be for its September meeting.