WASHINGTON–With both credit union trade groups pressing Congress to bring fintechs under the same regulatory umbrella as other financial institutions, one of the key questions to be asking is what happens when things go wrong, according to NAFCU.
Credit union trade groups have called on Congress to ensure a “level playing field” between unregulated fintechs and credit unions. A number of fintechs have in the last year seen strong user growth into the millions of customers. Congress held a hearing on the issue last week.
“What we saw from the hearing is there are still a lot of questions,” said NAFCU EVP and General Counsel Carrie Hunt. “We are going to see more hearings on this issue. I think, ultimately, there is going to be a lot of disagreement as to what that regulation should look like. There is agreement that traditional financial providers can find value in partners, including fintechs, which can innovate quickly. It’s when they go one step further that begs the question around safety and soundness. We think credit unions provide the best option for consumers cradle to grave. These apps to move cash around quickly have a very finite purpose. The consumer really likes them until there is a problem, such as fraud, and then they end up going back to their credit unions. This is about a fair playing field.”
Regulatory Rollbacks’
Separately, the Biden Administration continues to roll back a number of Trump Administration rules and regulations, most recently around fair housing
Hunt said NAFCU is watching the moves being made by the Biden Administration, as it strongly supports a “deregulatory agenda.”
“If there is re-regulation, we want it to be necessary regulation,” said Hunt. “That’s how we view these rollbacks. We strongly support fair housing. Generally, it’s not the intent of regulation we have an issue with, its regulatory burden and whether it’s necessary to achieve those goals. Generally, there are other ways to achieve those goals.”
By Ray Birch DOVER, Del.—By any measure, stablecoins have quickly become one of the most talked-about—and least understood—topics in credit union boardrooms. The pressure to “do something” is building, fueled by headlines, fintech momentum and a growing fear of being left behind. But according to InvestiFi CEO Kian Sarreshteh, that urgency may be misplaced. “There’s a lot of FOMO right now,” Sarreshteh said. “If I don’t adopt a stablecoin solution this year, I’m going to be left behind. I would argue pretty strongly that’s very far from the truth.” Instead of rushing to sign up for a Stablecoin pilot, Sarreshteh said credit unions should begin with a more fundamental question: what problem are you actually trying to solve? While stablecoins are often discussed as a potential challenger to traditional payment rails dominated by Visa and Mastercard, he believes that kind of mass-market disruption remains years away—especially in the U.S., where consumers already have fast, convenient opt...
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