CUNA Renews Call for Stiff Cryptocurrency Regulation | Credit Union Times

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CUNA told a US Senate panel investigating the FTX collapse on Thursday that it wants rigorous government oversight of cryptocurrencies, saying they pose a systemic risk to the nation's economy.

President CRADLE Four page letter from Jim Nussle The Senate Agriculture Committee also said that cryptocurrency fintechs are taking the unfair advantage of a lack of regulation.

Thursday's hearing was called "Why Congress Must Act: Lessons Learned from the FTX Collapse." FTX was one of the largest cryptocurrency companies in the world at the end of October, valued at $32 billion. On November 22, he filed for bankruptcy, owing around $8 billion to around 1 million people and corporations.

Nussle said that FTX "is just the last straw."

“The last year has seen the collapse of Terra/Luna, Three Arrows Capital, the Celsius Network, Voyager Digital, Genesis, BlockFi and Gemini,” Nussle wrote. "These cryptocurrency and blockchain-based financial platforms have shown that an unregulated and unsupervised structure is not viable and poses serious risks to consumers and the US economy."

jim nussle

CUNA and NAFCU have long argued that companies that handle cryptocurrency should have the same strict regulations that apply to banks and credit unions, and that credit unions should not be barred from participating in the market.

the NCUA told credit unions in May they can use the technology behind cryptocurrency as long as they follow the NCUA principles to ensure compliance with existing regulations and not create undue risk.

Cryptocurrencies rely on distributed ledger technology. The most common is Blockchain, which supports Bitcoin and Ethereum.

Its values ​​tripled or quadrupled from January to November 2021, then plummeted and accelerated in April. As of Thursday, both were down about three-quarters of their November 2021 peaks.

“The 2021 cryptocurrency boom brought consumers to the product in hopes of profiting from the gold rush,” Nussle wrote.

“Cryptocurrency exchanges, such as FTX, have been marketed as easy-to-use platforms for cryptocurrency newbies to buy, sell, and hold crypto assets. These companies were not sufficiently regulated, and as the market ebbed and flowed, they ran into cash crunch and were unable to fulfill customer orders.

“As a result, these exchanges stopped sales and withdrawals, leaving consumers unable to access their funds or coins and likely left with the bag,” he wrote.

Nussle said that CUNA supports President Biden's March executive order calling for a "whole-of-government" approach to cryptocurrency regulation. He said the comprehensive national standards will "level the playing field" while protecting consumers and the nation's financial system.

CUNA also supports other goals of the standards, including reducing the risks that cryptocurrencies could be used by those who engage in illicit activities or who would use them to threaten US national security. Biden's standards also require progress technological support to promote the responsible use of digital assets.

“Regulation of the crypto industry must be commensurate with the innovation and development taking place, or these systemic failures will persist and infect the larger economic ecosystem,” Nussle wrote.