Is Crypto Investing Coming to a Credit Union Near You?

In 2023, InvestiFi helped WeStreet Credit Union and Frankenmuth Credit Union offer crypto investing services to members. "At the time, most credit unions weren't willing to jump into the market," says Kian Sarreshteh, CEO and co-founder of InvestiFi.

But of course, the environment for cryptocurrency is much more favorable today. Bitcoin reached an all-time high above $124,000 earlier this year, while many other coins are notching milestones of their own.

Crypto stocks are also red hot, as evidenced by the impressive price action in cryptocurrency platform Coinbase Global (COIN) and the strong public offerings of CoinDesk owner Bullish (BLSH) and stablecoin provider Circle Internet (CRCL).

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In the meantime, the regulatory environment is much more amenable, as seen with the recent passage of the GENIUS Act, short for the Guiding and Establishing National Innovation for U.S. Stablecoins Act, which provides a framework for stablecoins.

There is also the recent regulatory guidance from the National Credit Union Administration, which has made it easier for credit unions to provide crypto services through partnerships with licensed service providers.

"These relationships allow credit unions to facilitate crypto investing without directly managing or holding the digital assets," says Felix Shipkevich, special professor of law at Hofstra Law.

In light of these developments, credit unions have shown growing interest in welcoming digital investing solutions. In the case of InvestiFi, it is continuing to partner with notable institutions such as Florida's Ocala Community Credit Union, Nevada's Clark County Credit Union and Oklahoma's Citizens Bank of Edmond.

"Credit unions are realizing that if they don't offer crypto to their members, their members are going to engage in crypto anyway and transfer their money to third-party crypto platforms to do so," Sarreshteh says.

Let's look at the type of services credit unions are offering their members, as well as the pros and cons for investing in crypto.

What types of crypto services are credit unions offering?

Generally, a credit union will use a technology partner such as InvestiFi to manage crypto services, including the buying and selling of digital assets.

This allows consumers to have a more robust offering, with access to mobile apps, a wide variety of cryptocurrencies, and high levels of security and risk management.

Credit union members can make transactions through their bank account, which makes the process convenient. The fees are usually competitive, too.

"Most credit unions are finding a happy medium with transparent transaction fees to the members that are lower than most major crypto exchanges, and also don't have nearly as high of spreads as many of the platforms," Sarreshteh says.

The spread is the difference between the bid and ask price on a crypto transaction. This is a way that some cryptocurrency exchanges will disguise fees, even though they claim to be "commission-free."

The pros and cons of crypto investing

One of the main benefits of bitcoin and other cryptocurrencies is to allow for peer-to-peer electronic cash transactions that do not rely on governmental or financial institutions.

Built on blockchain technology, these assets record transactions in a publicly accessible ledger secured through cryptography.

"Cryptocurrencies can be traded or transferred 24/7, often at a fraction of the cost of traditional methods, and are especially useful for international payments," says Philip Martin, chief security officer at Coinbase. "They create opportunities for diversification, more efficient transactions, and greater financial flexibility."

However, for many people, cryptocurrencies are about the potential of making attractive returns. In fact, this type of investment is emerging as an asset class, similar to stocks or bonds.

Yet the volatility can be extreme. Within minutes, the price of bitcoin and other cryptocurrencies will make a dramatic move higher or lower, with little or no apparent reason. Because of this, it's important for investors to evaluate their financial goals and tolerance for risk. And it's usually a good idea to talk to a financial adviser.

One very important note: When investing in crypto through a credit union, the deposit insurance, which is similar to the FDIC insurance that protects your money at a bank, does not apply to digital assets.

"At InvestiFi, we thoroughly vet our crypto custodial partners, which are all regulated trust companies," Sarreshteh says. "They all carry a certain amount of private insurance. While this does not cover all types of events of lost crypto and is not always dollar-for-dollar coverage, it is more than what you would get on almost every other crypto exchange or wallet."

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