Cryptocurrencies had a disastrous 2022, marked by massive declines in value, criminal charges, and exchanges going out of business. For credit unions, crypto is a cautionary tale and one they should tell to their members.
In 2023, credit unions have an opportunity not only to educate about crypto but to provide other digital innovations for tech-savvy, younger members.
In this post, we will look back at the disastrous 2022 for crypto, what it means for credit unions, and how to engage members who are interested in integrating technology and innovation with their banking.
What Happened to Crypto in 2022
Cryptocurrencies had a brutal 2022. Bitcoin, long the most well-known crypto, lost 60 percent of its value during the year. In addition, the stunning collapse of the FTX crypto trading platform and the arrests of its principals sent shockwaves throughout the industry.
In addition to the coins themselves losing value, so too did stablecoins, which were designed as a way to add stability to currencies and the industry.
The totality of the crypto disaster has shattered public confidence in digital currencies. A CNBC poll in late 2022 noted that 60 percent of Americans believed trading in digital currencies was a risky prospect, up from 45 percent a year earlier.
Experts predict that cryptocurrencies are likely to continue to lose value in 2023, making them a risky investment for credit union members.
The Future of Crypto
Crypto faces a tenuous future. While it is likely to continue to attract investors, especially those eager to grab an investment with a deflated price, the risks are considerable. Here are several of the changes likely to gain momentum in 2023.
Increased Regulatory Scrutiny
Crypto has thus far evaded regulatory eyes. However, the issues of the past year are likely to force regulators in the United States and elsewhere to focus on regulating the industry. Creating a sensible regulatory framework will protect investors and lend legitimacy to an industry that many have perceived as being a bit on the shady side.
Adoption of Crypto Payments
Despite the stark issues facing Crypto, it is still an asset class that many people value. And those people want to be able to pay for products using crypto. Already, some businesses, from Overstock.com to Starbucks, have adapted payment systems to accept crypto. More are likely to follow.
Crypto as Legal Tender
Both El Salvador and the Central African Republic accept Bitcoin as legal currency. More countries may follow suit, with St. Kitts and Nevis, Ukraine, and Venezuela mentioned as countries that may be next.
Crypto and Credit Unions
Credit union members are still bullish on crypto. According to Fiserv, 61 percent of Millennial and Gen Z consumers want their financial institutions to hold crypto.
However, recent events should have credit unions proceeding with caution. In fact, credit union economists urged caution in early 2022. For the risk-averse credit union industry, adding transactions for uninsured currencies is likely to come with added degrees of wariness.
A cautious approach, even if regulation comes to bear on crypto, appears warranted.
Credit unions have long been a highly valued partner for members seeking much-needed financial products, such as car loans and mortgages. With crypto, credit unions can continue to play that role, maintaining their reputation as reliable sources of financial products and member support.
A Credit Union National Association (CUNA) economist noted recently that credit unions should commit to educating their members as to the risks of crypto. While raising awareness about the myriad issues with crypto right now, credit unions can provide valuable insights to members who are more apt to hold crypto and want their credit union to allow for it to be held.
By acting in members’ best interests, credit unions can maintain credibility and protect members from risky, volatile investment choices.
In an opinion piece published in The Hill, CUNA president and CEO Jim Nussle noted that credit unions can and should still commit to innovation. Offering other digital services, Nussle noted, can provide members with new and unique services while also protecting consumers.
Finding the Right Strategic Partner
Credit unions should look for partnerships with like-minded parties that have embraced technology and offer products and services that will enhance the value of relationships with members. Spave is one such partner, with digital products that help credit union members save and give back to their communities.
As a Credit Union Service Organization (CUSO) primarily backed by the Michigan State University Federal Credit Union, Spave is uniquely positioned with the knowledge and insights that help drive success for financial institutions with which it partners.
Spave is a digital financial platform that partners with credit unions. With shared values, we help credit union members gain financial security and well-being with easy-to-use, intuitive tools.
Members who sign up for a free Spave account can connect seamlessly to all of the accounts they hold at your credit union, including checking, savings, and credit card accounts. Spave supplements the services you provide for your account holders rather than competing with you.
Spave gives credit union members more control of their financial matters. Among the services offered are:
- Customized Savings Percentages. Users can set a percentage of each purchase they make to be added to their transaction. Much like a tip, this percentage is added to the final purchase price, while an additional percentage is provided to one of more than 1.5 million accredited charities. The chosen percentage is automatically added to their savings account with your credit union
- Rounding Up. The round-up feature allows a user’s spare change to be deducted and allocated to savings and charitable contributions
- One-Time Donations. Spave lets users make a one-time contribution to a savings account or a donation of any amount.
- Insights. The Spave app provides each member with insights into their spending habits for up to 24 months. The categories, analytics, and dashboard make it easier for members to budget and make smart financial decisions
To learn more about partnering with Spave and how to connect with your credit union members, contact us today.