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Blockchain and DLT could improve products, services, and security: US Credit Union Regulator


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This week the US National Credit Union Administration (NCUA), the federal agency tasked with issuing insurance, sent a letter to directors and CEOs of credit unions clarifying their position on the use of blockchain and distributed ledger technology (DLT).

The NCUA said that federally insured credit unions were not precluded from “developing, procuring, or using” DLT and that financial tech had the potential to allow credit unions to “increase speed of service, improve security and expand products and services” for customers.

As with the internet at its inception, the NCUA recognizes that new technologies may transform how credit unions perform traditional financial operations and services.

NCUA Letter to Federally Insured Credit Unions and the Use of Distributed Ledger Technologies

The NCUA also stressed that where credit unions were considering the use of DLT, it would be imperative to implement sound risk management practices, including conducting appropriate due diligence when choosing a technology partner.

When conducting due diligence on DLT providers, examples of questions credit unions might ask were listed, and included:

  • Does the DLT exist within a private or public network?
  • Has the risk of compromise related to many points of entry (nodes) been assessed?
  • By whom and how is governance over the network conducted?
  • What are the data quality control expectations among participants within the network?
  • Are DLT solutions deployed within a strictly governed coding process in accordance with industry-leading practices?

The letter also noted that credit unions should evaluate “the permissibility of the activity itself and the opportunities and risks associated with any underlying technology“.

Learn more about different types of distributed ledger technology and blockchains:


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