As Prepared for Delivery on May 26, 2022
Thanks to the team for working on this Letter to Credit Unions, and of course to Chairman Harper and Board Member Hood for their enthusiasm and support. This week’s letter about distributed ledger technology, also called blockchain, is indeed just a set of broad principles. But we hope it sends the right message, which is that credit unions can engage in responsible innovation when it comes to blockchain technology.
We expect the letter to lead to follow-up conversations about specific use-cases, and one other purpose of the letter is to signal to the broader world, including Silicon Valley and venture capital firms, that America’s credit unions are a market worth pursuing for new applications and partnerships. A few credit unions are already launching new blockchain-based projects, but this letter is for the rest of the credit unions, who understandably want regulatory clarity before they feel comfortable starting innovative but possibly time-consuming projects.
We know this clarity is needed based on the experience of last December’s letter about partnering with third-party vendors like cryptocurrency exchanges. Before the letter, only one credit union had pursued such a partnership. The vendor they used had been turned down by about 30 other credit unions, all of whom were interested but mentioned their regulator as a reason why they were apprehensive. And that’s for something that didn’t break any NCUA rules. But then in December, the NCUA put out guidance and all these projects launched into action. That shows the power of clarity.
We know that early clarity is more useful than that which comes later. Giving continuous clarity is the job of any regulator. We know that there are many other projects out there that credit unions want to pursue — and that don’t break any rules — but we also know there are compliance offers that would really like to see some affirmative guidance.
I’ll finish with a note to history. This week’s blockchain letter is just broad principles about a new industry, but the model was the Clinton-Gore Administration’s 1997 principles for the internet. They posted five principles on WhiteHouse.gov, a website itself that was only about two years old at the time. It wasn’t a new law, just a post on the White House website. Now I’m a Republican, but I have to say that the Clinton Administration’s decision to post those principles was one of the most beneficial things to come out of D.C. in my lifetime. It sent a message, it was early clarity, and America basically won the internet economy. We got the most jobs, the most investment, the highest investment returns.
We can win the blockchain economy as well — we just need some clarity from the government. I’m proud that the NCUA is doing its small part.