Who Will Own The Member Relationship When Money Goes Digital? / THE feature / CUToday.info

By Ray Birch

SARTELL, Minn.—For years, many credit unions have viewed cryptocurrency as a speculative investment best left to exchanges and fintechs. But leaders at St. Cloud Financial Credit Union believe NCUA’s latest proposed stablecoin rule signals something much bigger: regulators are beginning to build a framework for how credit unions will participate in what they see as an emerging digital-money infrastructure.

“The world I see in the future is going to have the digital dollar moving immediately on FedNow, stablecoins moving money within stablecoin networks, Bitcoin and the Lightning Network, and other digital assets,” St. Cloud Financial President and CEO Jed Meyer said. “As banks and credit unions, we should want to custody in each of those worlds because they are going to become a big part of our traditional business as the form of money changes and the way it moves changes.”

The NCUA’s proposal, issued as part of its implementation of the GENIUS Act stablecoin framework, would establish how federally insured credit unions can engage with payment stablecoin issuers and related activities. While the proposal has drawn industry attention because it creates a pathway for credit union participation, Meyer said the most important takeaway is that regulators are no longer debating whether stablecoins matter—they are now defining the rules of engagement.

For $440-million St. Cloud Financial, which has spent roughly five years evaluating how credit unions can participate in emerging forms of digital value and money movement, the proposal validates a direction the institution has already been pursuing. As CUToday.info previously reported, the credit union selected DaLand CUSO’s infrastructure platform to support its digital-asset strategy, with digital asset safekeeping serving as one of the first member-facing capabilities.

Important Clarity

Earlier this year, St. Cloud reported surpassing 10 Bitcoin held in member vaults, with EVP and Chief Lending Officer Chase Larson arguing that digital assets represent a fundamental shift in payments, deposits and member relationships rather than a niche product.

Larson said the new proposal provides important clarity around payment stablecoins, including requirements for one-to-one reserves, risk management and compliance. But he emphasized that the rule also highlights a key limitation: credit unions would not directly issue stablecoins themselves, instead participating through approved Permitted Payment Stablecoin Issuers (PPSIs).

“The guidance from the NCUA states that as a credit union we cannot issue stablecoins directly,” Larson said. “They do permit it through a Payment Stablecoin Issuer, and that’s what gets me excited. We see opportunities through partnerships and technology that could allow credit unions to offer white-label stablecoins and participate in these networks in ways that retain value and liquidity within the credit union system.”

Yet both Meyer and Larson contend that stablecoins may ultimately prove to be only one chapter in a much broader transformation. Meyer said the industry risks becoming too focused on stablecoins themselves instead of understanding the larger implications of tokenization.

“Stablecoins are super important, but they’re not going to be what we’re talking about in five years,” Meyer said. “They’ll be a piece of what we’re talking about. This is not a one-product innovation. It’s a revolutionary shift in the infrastructure of banking.”

Long-Term Disruption

Meyer pointed specifically to tokenized deposits as a potentially larger long-term disruption than stablecoins. While stablecoins currently dominate policy discussions in Washington, he said future financial networks may include tokenized deposits, digital identity credentials, smart contracts and multiple forms of digital value moving across different blockchain-based systems.

That outlook helps explain why St. Cloud has focused less on choosing a winning cryptocurrency and more on building technology capable of operating across multiple networks. Meyer compared today’s environment to the early days of card payments, when financial institutions did not know whether Visa or Mastercard would dominate but understood they needed the ability to participate in both.

“We’re not in the business of picking a winner,” Meyer said. “I don’t have to pick a blockchain. I don’t have to pick whether it’s Bitcoin, Solana, USDC, USDT or white-label stablecoins. What we’ve built is the ability to operate in those money networks as they emerge.”

For the broader credit union movement, Larson said the biggest danger may be inaction. As CUToday.info reported earlier this year, St. Cloud leaders have repeatedly warned that the institutions controlling digital wallets and transaction networks could ultimately control future member relationships. The NCUA proposal, they argue, should serve as another signal that digital assets are steadily moving into the regulated financial mainstream.

“The best advice I can give CEOs and boards is to take this on themselves,” Meyer said. “This is not a maybe. This is not something that’s going to stay niche. You need to understand what’s happening because it will fundamentally change how money moves, how value is stored and how financial institutions operate.”