Crypto down; Some consumers do not calculate it
Credit unions may consider pausing, but perhaps not completely abandoning cryptocurrency offerings as the sector emerges from recent scandals.
FTX. The twins. Binance. With now household names in crypto exchanges and funds making headlines, it’s no wonder that American consumers seem to be publicly backing away from cryptocurrency investments. This sentiment is reflected in the latest PYMNTS/PSCU collaboration, “Credit Union Innovation: Bridging the Cryptocurrency Divide,” where consumers in the survey showed less interest in crypto in the last quarter of 2022 than they did in the first.
Muddying the waters is crypto’s volatility, as some digital currencies like bitcoin have record trading while other sector firms like Gemini and Coinbase announce significant layoffs. Additionally, since the collapse of Silicon Valley Bank (SVB) and Signature Bank, many crypto companies have been left scrambling for US bank backing.
Credit unions have so far been hesitant to keep crypto in line with some of their other financial institution competitors. When surveyed in Q4 2022, 66% of CU executives were not interested in offering crypto products due to concerns about volatility. And while caution may be warranted when it comes to decisions about where to make innovative investments like crypto ownership offerings, it comes at the expense of potential customer retention.
Previous PYMNTS research noted that 43% of millennial credit union members own crypto, but if the CU does not offer crypto services, they have accounts with other institutions. However, 19% of CU members are very or extremely interested in their primary FI offering crypto services. And even though public sentiment has eased with the 2022 crypto downturn, one in three American consumers still owns some of the digital currency.
In an interview with PYMNTS, Dr. Yan Zhang, co-founder of Web3-native payment aggregator Pelago, explained why the overall crypto sector may simply be in a temporary state of flux while lawmakers debate regulation.
“[Lack of regulation] has put the entire industry into a state of chaos,” Zhang said. “The instability of regulation is really hurting the industry. From my perspective, no decision is worse than bad decisions. It will take time to discuss, but the industry is looking for certainty – these things are allowed, these things are not allowed, these things are temporarily not allowed. “
Meanwhile, there are more tangible signs that crypto may not be finished. In New York state, lawmakers are considering a bill introduced earlier this year that would allow consumers to pay government agencies with the digital currency. Abroad, two French companies are piloting a program where crypto is enabled as an in-store payment option intended for wider use if it proves successful. Swiss state-owned bank PostFinance entered the cryptocurrency business earlier in April after partnering with Swiss digital bank Syngum to offer customers “a range of regulated banking services for digital assets”.
It’s understandable why credit unions might be hesitant to deal with crypto at the moment. However, it may be useful to watch the digital currency’s continued uptake by governments and foreign FIs as these hiccups pass and regulations around the currency come more into focus. When the dust settles, crypto features may still prove to be a worthy loyalty-building investment.
