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Cryptocurrency and Credit Unions: Where to Start?

Lou Grilli, Senior Innovation Strategist for PSCU

If you’re like most of us, you find cryptocurrency a bit… well, cryptic. While we’re intrigued, we’re also uncertain—and even moreso after the recent crypto crash.

Credit unions have been watching from the sidelines, knowing that the financial sector will, and already has, been impacted, but not necessarily eager to dive into the fray.

This month, Lou Grilli, Senior Innovation Strategist for PSCU and an expert in cryptocurrency for credit unions, joins us to talk about why your members are buying cryptocurrencies, how they might be scammed, and five initial steps to help you get started with crypto at your credit union.

The BIG question:
What are the implications of cryptocurrency for the credit union industry, and what opportunities and challenges does it present?

 

Key takeaways

  1. If 2021 was the “year of crypto,” with the Staples Center rebranding as Crypto.com Arena, an entire country making Bitcoin legal tender (El Salvador), and numerous influencers constantly talking about it, 2022 will be a year of learning what it can do for the mainstream—and how.
  2. While members are likely driven by FOMO (fear of missing out) and the speculative aspects of crypto, it has the potential to be every bit as disruptive to a whole host of businesses as the internet has been.
  3. Two low-risk ways to start offering crypto to your members:
    • Let members buy crypto in your app through one of the crypto exchanges so you don’t have it on your ledger
    • Create a redemption option for your credit card rewards points to buy gift cards to a crypto exchange
  4. Scams are here, and they will only increase. It’s really important that credit unions educate their members (and themselves) to help them keep their money safe.
  5. To see how much this is already affecting your members, look into how much money is flowing out of your institution via ACH and debt payments to the top 10 crypto exchanges, as well as to cash apps and Venmo. Then look at that market segment and figure out how you want to interact with them.

 

Read the full transcript

Cameron Madill:
Hello, and welcome to another episode of the Remarkable Credit Union Podcast. We created our podcast to help credit union leaders think outside of the box about marketing, technology and community impact. We bring our expert guests from inside and outside of the industry for conversations about innovation. Our goal is to challenge your preconceptions about business as usual, and provide you with actionable takeaways that you can use to grow your membership, improve the financial health of your cooperative and magnify the positive impact you make in your community.

Cameron Madill:
Today’s big question is something that’s on the tip of everyone’s tongue. What are the implications of cryptocurrency for the credit union industry and what opportunities and challenges does it present. Today, I’m very excited to welcome Lou Grilli. Lou has had a long and impressive career in finance and technology. He’s currently serving as the senior innovation strategist for PSCCU, who no doubt, many of you use. They are the country’s premier payments CUSO.

Cameron Madill:
He has previously worked at Fidelity National Information Services, American Express, and Verizon. And today, Lou is one of the credit union industry’s foremost experts on crypto, and he’s been published and quoted in CUInsight, CUToday and the Financial Brand among other publications. On a personal note, Lou lives in Florida. I kind of hate him for this. He lives on the water. It is very cold in Oregon right now, where I’m based.

Cameron Madill:
He lives on the water and he has a boat. And Lou is also a big fan of the ’80s and knows everything about the eighties. Lou, thanks for joining us today.

Lou Grilli:
Thanks for having me on Cameron. Having listened to your podcast for a while with some amazing, fantastic guests before me, I’m honored to be asked to come and speak to you and the listeners about cryptocurrency.

Cameron Madill:
Well, thanks for joining us. It’s such a both really exciting, but also somewhat daunting topic because of the scale of it. I read in one of your articles, you said 2021 was the year of crypto, and I’d just love to hear why do you think that is? And what has pushed cryptocurrency into the mainstream in this last year?

Lou Grilli:
It’s my unscientific analysis of 2021, but headlines like the Staples Center, right? Home to the LA Lakers and the Clippers and home to the Grammy’s, at least they were broadcast this year, being renamed the crypto.com arena for some crazy $700 million record naming rights. When you see Janet Yellen and Jerome Powell, the US treasury secretary and the fed chair, both expressing their concerns at the growth of crypto, a whole country, El Salvador makes crypto a legal tender in that country.

Lou Grilli:
And some ensuing problems associated with that. More on the pop culture side, Elon Musk, Mark Cuban, Snoop Dog, Reese Witherspoon, a whole bunch of other influencers, they’re all tweeting about their favorite digital currency. And on a personal level, when my dad asks me, what is Bitcoin and what to use it for? Then I had to make the argument. Yep, it’s gone mainstream.

Lou Grilli:
So you ask what pushed it into mainstream? The biggest thing is making it easy to purchase. So up until three or four years ago, if you to buy crypto, assuming you even knew what crypto was, you had to create an account at a crypto exchange that you probably never even heard before. Then you had to hand over your shared draft account number and routing number. In some cases, you had to download a wallet from the exchange to store your crypto, and then August 2018, that all changed.

Lou Grilli:
Cash App, which was then from Square, now Block, made it easy to purchase and hold and sell crypto, initially just Bitcoin, right from within the app, Venmo and PayPal came along and did the same thing. The second thing that I think is causing this mainstream is FOMO, fear of missing out. So at PSCU we track debit card transactions at the major US exchanges, right?

Lou Grilli:
Debit card transactions being made at the exchanges, and the flow of money going out from credit unions to the exchanges has been noticeably growing. I present this to credit unions, when I look at that, there were two obvious spikes in purchase volumes in 2021. The first was in May and the second was in November. The first time I saw that, that’s kind of interesting. And those two times coincide with Bitcoin reaching new peaks, breaking the $64,000 ceiling, literally $64,000 is the peak that it reached in those two times.

Lou Grilli:
I’m being a little facetious here, but in hindsight, buying at the peak is not a really good investment strategy, but it didn’t matter. There was such a fervor that big numbers create and that made a whole bunch of people want in. And I said, that was all my unscientific analysis. I did come across a stat that kind of corroborates, we are seeing from the data, 51% of current crypto owners bought their crypto for the first time within the past 12 months, which means that for those people, at least 2021 was their first year of crypto.

Cameron Madill:
I love how you touched on the FOMO component because I went to college at Stanford and I entered in ’97. And so going down to the Bay area one of the hubs of tech innovation in the .com era, I remember I felt that. I remember hearing stories of, there was this FOMO of students just dropping out and getting $125,000 salaries who didn’t know how to code. They were hired as coders and they were just like, we’ll teach you all that.

Cameron Madill:
And there was this greed or FOMO in the air of something big is happening. People are creating generational wealth sometimes without even particular skills. And so I think that stage we’re in of the evolution of cryptocurrency, that makes sense why that pushed it mainstream. But you and I were also talking before the podcast, that I also see another parallel there and that so many of those internet companies in the late ’90s went bust.

Cameron Madill:
They actually were really bad business models. They delivered no value to their consumers. They just basically burned their investors money up. And also a lot of people were just caught up in how this is just so dense and weird and different. There’s all these terms and it’s hard to connect to the internet. And so as we’re moving from obscure to mainstream, since you’ve been doing this for quite a while, I want to know how did you go from being a skeptic to first becoming really curious about crypto and why are you so intrigued with the whole field in general?

Lou Grilli:
So back in like the 2013, 2014 timeframe, there was a lot of big companies that were toying with the idea of standing up a blockchain for a number of interesting use cases. And at the time, I worked for a really large credit debit card processor. And a team of us were looking at this, talking about it. And so we applied for, and we were granted a patent. So my name’s on a patent still owned by that very large card processor, for using blockchain for a card loyalty program.

Lou Grilli:
Think of it as multiple credit card issuers, right? The banks and credit unions, they issue rewards on the blockchain and multiple merchants would accept these blockchain-based rewards for redemption, for merchandise, for airline miles or for buying Bitcoin. So I’ve been following the topic ever since, but what really ramped it up for me was a little over a year and a half now, PSCU is a CUSO, so one of our owner credit unions asked the question, what is the impact of Bitcoin going to be on my debit interchange?

Lou Grilli:
And so I was given the task of writing up the answer, it’s not a simple answer. It took me down several rabbit holes trying to understand, well, what’s the impact of stablecoin, Central Bank digital currencies, decentralized financial services, DeFi, NFTs. And so out of that, came white papers and blog posts, and many, many discussions with credit unions. In some cases, addressing a credit union’s board of directors to get them educated.

Lou Grilli:
The thing that intrigues me most about the topic, it’s not about this lottery mentality, get rich quick mentality. What intrigues me is the possibility. So I’m a payment geek, this is one example. I’m a payment geek and crypto does not recognize a nation’s borders. So when it comes to international remittances, cross border payments are slow and super expensive. And I think that area is so ripe for disruption. So when I send an email to a colleague in another country, I’m not sending an international email, I’m just sending an email. So likewise, I’m intrigued at the potential for cross border payments, just becoming payments.

Cameron Madill:
I love that example, Lou, I used to do a lot of volunteer work with refugees and hearing their stories of how they got money home, it was so expensive. It was so slow. I mean, and it felt a little bit like the equivalent, how it used to be that we had to do all this work with travel agents. And then finally it was like, actually, I can just go to Kayak or Expedia and I can just do the same search that you’re doing and not pay these fees. And I feel like that’s one of the most exciting opportunities and I agree, that’s a fabulous framing.

Cameron Madill:
I don’t send an international email to a friend in another country. I just send an email and it’s there. So I’d love to know. I know you’ve worked with a bunch of credit unions that are looking at exploring cryptocurrency, and I’d just love to hear what are some of the concerns that you hear them having and what do you see them being excited about?

Lou Grilli:
Oh, two questions. All right. So the biggest concern, and if it’s not a concern of that credit union, I try to emphasize that it should be, is reputational risk, right? We just saw Bitcoin’s price drop by 50% from its peak. Here’s what I worry about, if a member buys their Bitcoin through their credit union and they lose half of their speculative investment they made, will that ruin their member’s view of the credit union? Will they somehow hold the credit union responsible?

Lou Grilli:
But basically if enough of this happens, does the net promoter score drop for that credit union? Hopefully, not, I have not seen that, but that’s the risk to the credit union’s brand. I often use the expression when it comes to crypto, there is way more interest than there is understanding. And so I’m concerned that people are investing in crypto without that understanding, but I’m seeing credit unions getting excited, wanting to learn more.

Lou Grilli:
The best reason I can come up with that is it’s become a cultural phenomena, at least in the financial space, right? Buying into the stock market long time ago, used to just be for the wealthiest people. And it was out of reach for people like you and me. And then think back to, I think it was 2008 Super Bowl, E-Trade had a series of commercials with the baby, the talking baby. I remember the baby saying, “It’s so easy, I just bought stock. If I can do it, you can do it.”

Lou Grilli:
And that democratized being anybody could then buy stock, and then Robin Hood and others came along the way. So that’s what I see, investing in crypto used to be super complex, only for the geeky, it was not really well understood. Now, it’s literally just a big green buy button in the Venmo app.

Lou Grilli:
One more thing that happened for credit unions, a lot of credit unions were sitting on the sideline waiting for permission from the regulator, which at the end of the year, the NCUA came out with their guidance, a guidance letter. And that I think, got a lot more credit unions interested in exploring the possibility in dipping their toes in the water, so to speak.

Cameron Madill:
Well, fabulous segue. And thanks for bringing up Venmo because I remember I was paying someone on Venmo the other day, or it was a month ago or whatever, I was like, whoa, I can push a button and buy Bitcoin in Venmo, kind of like the Staples Center rebranding is crypto.com. This is something that has gone mainstream.

Cameron Madill:
There is obviously this sort of speculative element, but at the end of the day, if people are moving tons of money around and that’s a core part of the business of any financial institution, including credit unions, what are your thoughts about how credit union can dip their toes into the water in this kind of new and maybe slightly scary area? What are some low risk opportunities that they can start exploring?

Lou Grilli:
The two most desired capabilities that some credit unions would like to offer to their members, the two requests I hear most often, both center around remaining competitive, right? They want the option to offer their members an easy, safe way to purchase a variety of crypto, not just Bitcoin, from within the mobile or online banking app, similar to what Cash App and the others do.

Lou Grilli:
And second, they’re asking for a rewards credit card with cash back in the form of crypto, kind of like what the Venmo credit card does today. Block5 offers a card that offers 1.5% Bitcoin back without bearing the risk of putting cryptocurrency on their ledger, two steps that they can take, one, and I tell credit union this, talk to your digital experience provider, several of the major ones, Digital Insight, alchemy, Finastra, Q2, Fiserv, have all publicly announced a partnership with this two crypto exchanges that I’ve seen mentioned in these partnerships that allow their mobile banking clients to purchase crypto from within their apps.

Lou Grilli:
And their apps is the credit union branded banking app. By doing this, you’re not forcing your member to leave your branded space to go off elsewhere to buy crypto. And when it comes to the loyalty program with crypto, cash back in the form of crypto, one kind of easy step is, easy is a relative word, but add a redemption option in your card loyalty program.

Lou Grilli:
And that option is like alongside all the gift cards, a gift card from one of the major crypto currency exchanges so that your members can convert their reward points into crypto. And I know it’s not a direct cash into your crypto wallet directly, but it does show the member that their credit union is offering options in the space.

Cameron Madill:
I love those examples, Lou. I’m going to go to the dark side now. I was laughing earlier, I probably shouldn’t laugh, but when I was reading your articles yesterday, I literally underlined, there’s far more interest than understanding when it comes to cryptocurrency and most members may not be aware of the risks. And so I really appreciate that you’re talking about the reputational elements, in particular, if people start losing money.

Cameron Madill:
So there’s kind of two angles, as you said, I think there’s, I guess, as I said, I was in the bay area in my late teens, heard all these stories about people making money. I ended up getting in a pretty bad car accident and got an insurance settlement for like $18,000, which was way more money than I’d ever had. And being a responsible kid, instead of buying like a car or a new guitar, I put all that money into tech stocks in like 2000 or something like that.

Cameron Madill:
So needless to say I lost like 60% of the value within six months, that was my first investing lesson. And yeah, it made me grumpy, it made me unhappy with the mutual funds that I bought. So there’s that element of, let’s just say a big market with a lot of unsavvy customers in it. The other one, which is something credit unions are familiar with in other forms is just a whole new range of financial scams.

Cameron Madill:
And I’ve been seeing a bunch of these through just educational materials, some of the places I hold various cryptocurrencies. And so I’m curious, even if a credit union isn’t interested in adding crypto to their product and service offerings, how do they educate and protect their members? Because they’re going to be vulnerable to crypto scams, whether the credit union offers any services or not.

Lou Grilli:
When it comes to scams, gosh, I’m seeing, oh, what am I saying? Websites that offer this easy way to purchase crypto, just enter your bank account number, and then obviously your money is gone and you have nothing to show for it. I’ve seen websites that offer great discounts if you spend your Bitcoin there, basically a portal to spend your Bitcoin. And of course they take your Bitcoin, which keep in mind, when a Bitcoin transaction settles, it is immutable, meaning you can’t get your Bitcoin back.

Lou Grilli:
And of course, you didn’t actually buy anything with your Bitcoin, you just gave it up. I would love to see, and I recommend that credit units do this when I talk to them, that whether or not you’re going to offer any crypto services, offer your members education to resources that I point them to. The FTC, the Federal Trade Commission has a really good page on their consumer information site with some great language that a credit union can pick up and put in a bulletin to your members about crypto.

Lou Grilli:
The SEC has a really interesting write up on Ponzi schemes using cryptocurrency. And I do include that when I speak with credit unions, and the bottom line is help your members understand that if it looks too good to be true, yeah, it’s probably too good, it probably is not true.

Cameron Madill:
Yeah, true words. I feel like I found throughout life. So one of the things that I think is really cool about cryptocurrency and maybe just even more broadly, the whole space, is another effort to remove the middleman, disrupt all these established business models. And it seems to me that credit unions that’s not for profit, owned by their member institutions have an opportunity and a willingness to do things that, let’s just say a community bank or a mega bank, a Chase or a Wells Fargo just would not be willing to do.

Cameron Madill:
And so I’m curious if you’ve seen anything unique out there that credit unions could do that banks and FinTech companies wouldn’t be willing to do. And that might be a way to actually leave the credit union difference even more deeply.

Lou Grilli:
I’ve seen most of the mega banks shying away from offering crypto purchases and from within their mobile online banking, basically a bank branded way to buy, hold, sell. And I have seen a couple of credit unions, really one was Unified Financial publicly announced that they’re in Torrance, California, and they are all in with allowing their members to purchase from within the Unified branded app. To me, the risk and the opportunity are two sides of the same coin, right?

Lou Grilli:
The risk is a market risk. The market risk is being left behind as other industry disruptors use crypto support to expand their relationship with their customers who are your members or your unions members. Cash App, perfect example, Cash App makes more revenue from crypto than it does from its original business, which was merchant acquiring for small businesses like food trucks. So that’s the risk that your members are being taken away outside of your branded space.

Lou Grilli:
The flip side of that coin though, is the opportunity to offer similar services, but with lower transaction fees in a safe and compliant way, and without your member having to divulge their personal information to some unfamiliar crypto company, I’m sure you’re aware probably more than I am, lots of studies that members trust their credit unions more than they trust big tech and more than they trust big banks.

Lou Grilli:
So credit unions can offer crypto-related services like the ability to purchase crypto, but they can combine that with information that ensures the member is making well informed decisions about whether cryptocurrency is right for them.

Cameron Madill:
So I really appreciate that perspective. And I think it just speaks to the willingness of not for profit cooperatives to go places that for profit businesses won’t go. And I think that’s a lot of the excitement that I see around the future of cryptocurrencies and maybe blockchain more generally. I like to think of this as, if this is where the internet was in the late ’90s, 20 years later, who would’ve foreseen smartphones?

Cameron Madill:
Or the fact that we’ve got these tech giants on a scale, that the profitability of these little text advertisements and search results would drive Google, one of the biggest companies in the entire world, social media, all the misinformation and echo chambers that have come from that. And so if we’re at a similar stage, one of the quotes I read in… I forget what it was called. I wrote it down here, it was the FinTech Market Overview 2021, something like that.

Cameron Madill:
And it basically said that today, crypto still feels more like a solution in search of a problem, but that seems like a temporary concern as use cases continue to evolve. When we think about the future, I know forecasting, the future is hard, but you brought up international remittances, which I agree just seems like a huge opportunity. Are there any other kind of use cases that you get particularly excited about?

Cameron Madill:
I did not read your patent, but I read the article about the patent. The patent was very dense, but the article about the whole idea of using blockchain for credit card rewards, I thought was a really brilliant idea. Are there other use cases when you look into the future of like, this might really disrupt an industry, a part of credit union’s business models, or just the world more broadly?

Lou Grilli:
Maybe this is a little basic, but going back to what prompted me to want to educate credit unions in this topic, and that was that credit union that came to us saying, what’s the impact Bitcoin’s going to have on my debit interchange? Yes, it’s still too volatile to pay at Kroger with Bitcoin, but we’re starting to see debit cards being issued by the exchanges, sometimes they have rewards associated with it.

Lou Grilli:
We’re seeing merchants accepting crypto natively, especially eCommerce merchants that don’t have to ship until the transaction settles, which takes some of that risk of volatility out of the equations. And granted these transactions are just a drop in the bucket relative to the overall picture, but they, each one represents a payment not being made on the credit union’s debit or credit card. And of course I mentioned El Salvador making legal currency and as part of that, mandating that merchants must accept Bitcoin. Interesting spin, McDonald’s, KFC Starbucks, and many other American companies have franchises in El Salvador.

Lou Grilli:
So they have to figure out how to accept Bitcoin. Could that be exported to the US? Something else that really caught my eye is the amount of money flowing out of credit union shared deposits. So I’ve asked credit unions, ideally before I talk to them to go and do this exercise, look at all the debit and the ACH payments being made to the top 10 crypto exchanges. Okay, that part was kind of easy. And with most credit unions, that number is looking pretty significant and it’s growing.

Lou Grilli:
But on top of that, look at your debit and ACH payments to Cash App and Venmo, and then just make a conservative assumption, one third is being used for crypto purchase, the rest being still splitting dinner checks kind of thing. And that gives you a bigger picture of how much money is flowing out of your shared deposits into crypto. Now, here’s one more step that really brings it home is, now look at who is doing that.

Lou Grilli:
Look at the segment, those individuals who are making those transactions and try to find the commonalities because that market segment would be the most likely to take up crypto services offered directly by the credit union.

Cameron Madill:
And Lou, is it reasonable assume that, that market segment is also probably mostly younger and often considered the most desirable market segment to grow for credit unions?

Lou Grilli:
It really varies. The credit unions have done this for me, have gotten some surprising results, but definitely it skews younger. And these are people who, I guess one thing that I’ve seen in common is these are people who are looking for better returns than 0.05 return on their shared draft or even less in their money market returns. Like you looking to get rich off of some tech stocks just before the .com bubble.

Cameron Madill:
Lou, I guess, I’m curious, you sort of touched on this in the very beginning, but would we find your dad in those transactions? Is he now buying crypto?

Lou Grilli:
I would put them in the category, which is a large category of the crypto curious.

Cameron Madill:
All right.

Lou Grilli:
And it’s those crypto curious people though, that credit unions can provide a service to, because dad doesn’t use Bitcoin. There’s many people who are not going to set up an account at Coinbase or one of the other exchanges, but now when they’re credit union, which they do use that mobile banking app online banking, now has this new feature, buy crypto, oh, well, then maybe it’s something to throw 25 bucks in and see what happens.

Cameron Madill:
Yeah, well put. One last thought, I want to ask you some rapid fire questions, but just your comment about looking at the amounts that are getting spent, debit cards with stable coins and how it’s just a drop in the bucket. But I feel like if there’s one thing that we should have all learned over the last couple years of a pandemic, or maybe watching the technology age is that exponential growth, a drop in the bucket, it turns into two drops in a month and four drops a month after that, exponential growth is something that can catch us a whole lot faster than we expect.

Cameron Madill:
So I think that’s just a great framing for all of us to think about why this, as you said, has gone from obscure to mainstream, but without a lot of savviness and how it will become much more central in all of our lives in the next several years. Obviously, very central in your life already, Lou, since you’re the expert on this. All right. So I’m going to totally shift. I want to ask you some rapid fire questions, no preparation, just wacky things we got to know about you. What’s your favorite movie, Lou?

Lou Grilli:
Blues Brothers.

Cameron Madill:
Blues Brothers, that’s a classic. All right, well done. If you could have dinner with one historical person, who would that be?

Lou Grilli:
Probably, Walt Disney himself. He was such a visionary. There was no such thing as a theme park before Disney came, there were just amusement parks. And cartoons were just silly cartoons before they were animated classics. And just the way he was able to guide a team of people who never created an audio animatronic before because no one ever heard of that before, so yeah, Walt Disney.

Cameron Madill:
Right, I love that answer. What’s your favorite meal?

Lou Grilli:
Yaki.

Cameron Madill:
Yeah. Okay. Do you have a favorite dessert then?

Lou Grilli:
I guess, since I choose Yaki, I’ll do Tiramisu.

Cameron Madill:
All right. You got the whole theme there. And I think the last thing I want to know is since you said you’re a big fan of the ’80s, what’s your favorite song from the eighties?

Lou Grilli:
Bizarre Love Triangle. Take On Me. No, first answer, Bizarre Love Triangle.

Cameron Madill:
All right. Who’s that by? I have to admit my ignorance on that.

Lou Grilli:
New Order.

Cameron Madill:
Okay. I’m looking it up. I know Take On Me, at least. All right, Lou-

Lou Grilli:
I used to DJ and that was a song that would get people dancing.

Cameron Madill:
No kidding. All right. Well, I’ll play it right after we’re done with this podcast. Lou, it’s been really great having you on. I really appreciate you sharing your expertise. I’d love to just know, is there anything that you didn’t get to, that you want to share with our audience or anything you want to reiterate that you’ve already shared?

Lou Grilli:
So one of the questions that I get asked by credit unions, what are some things that I should be doing right now? Give me some specifics and I want to leave credit unions, and I guess I’ll leave you with this too. So after doing this couple of times, I came up with my top five. So first, have a discussion at the board level. Does the board of directors want your credit union to move in this direction or do they feel that it’s not in the best interest of their members?

Lou Grilli:
Because that’s why credit unions exist. And I’ve been brought into a few board of directors meetings and I’ve seen the answer, the approach is different for each credit union. There is no one right answer. And second, the chief compliance officer at your credit union needs to be in the center of the mix regarding what’s being said, the education that’s going out. And if you’re going to enter into any partnerships or services, then it’s all in the shoulders of the chief compliance officer, because this is new and rapidly changing.

Lou Grilli:
And related to that, the third is if the credit union’s going to do something, then work closely with your examiner. Right? I mentioned the NCUA did give guidance. The guidance in essence was credit unions are not prohibited as long as you do due diligence. Okay, that’s nice, but there was so much detail missing. Like if you’re going to partner with an exchange, what kind of charter should the exchange have? Anything like that.

Lou Grilli:
The fourth is keep up with the news and there’s many ways to do that, but one successful way I saw credit unions doing this is they create an internal team of crypto curious staff. You know that in any company, in any credit union, there’s a couple of people that are really interested in the topic and they read news about it. So let them meet biweekly, talk about stuff that’s happening, announcements that have come out. And then while they’re doing that, have them create their output on the fly.

Lou Grilli:
Not a formal report, just a simple newsletter bulletin, whatever with bullets and links and then maybe where it matters the implications for the credit union if that news thing has implications. And fifth final is, and we spoke about this, regardless of whether your credit union’s going to offer any services or not, realize that some of your members already are involved in crypto. So educate them on the risk, try to increase the understanding to match the level of interest.

Cameron Madill:
Awesome. Thanks, Lou, that was fabulous. I just want to thank you for your time. It’s been a real pleasure having you on the podcast and wish you the best with all of your continued work in this space and with credit unions.

Lou Grilli:
Yeah, this has been awesome, letting me share my thoughts and insights with your audience.

Cameron Madill:
All right, folks, thanks for joining for another enjoyable episode. I really thought it was great to chat with Lou and hear his take on such a enormous topic that’s going to have such big impacts on all of us. I’d like to share my key takeaways. My first key takeaway was that if 2021 was the year of the crypto with the Staples Center rebranding as crypto.com arena, and entire country making Bitcoin legal tender, and numerous influencers talking about it constantly, 2022 will be a year of learning what and how it can do from the mainstream beyond speculation.

Cameron Madill:
I think remembering that while a lot of your members are likely driven by fear of missing out and the speculative aspects of crypto, that it has the potential to be every bit as disruptive to a whole host of businesses as the internet has been. I always think that we don’t want to be the travel agents of the crypto era. I thought Lou had two great low risk ways to start offering crypto to your members. First off, letting your members buy crypto in your app through one of the crypto exchanges, so you don’t have it on your ledger.

Cameron Madill:
And then second, creating a redemption option for your credit card rewards points to buy gift cards on crypto exchanges. I think it’s important to remember that of course scams are here and they’re only going to increase and that it’s really important that credit union educate their members to help them keep their money safe. And there’s some great resources from the FTC and SEC that we’ve mentioned.

Cameron Madill:
And I think it’s always so powerful, I’ve seen this done with figuring out the volume of payday lending money that your members are tapping into. Just doing a simple analysis of how much money is flowing out of your institution from ACH and debit payments, both looking at kind of the top 10 crypto exchanges, as well as looking at folks like Cash App and Venmo and assuming maybe like a third of that is in crypto and then saying, who’s this market segment? How much do we want to interact with them? And what are the implications for us?

Cameron Madill:
And then lastly, I just really thought it was a great set of five things that a credit union can do now. So step one, have a board discussion. Is this a priority for us? Is this in our members’ best interests or not? Second, engaging with your chief compliance officer. Third, working closely with your examiners. Fourth, setting up an internal team of crypto curious people, as Lou said, every company’s got them. So put them together in a room every couple weeks and have them share their insights and implications.

Cameron Madill:
And then lastly, just realize that some, many of your members are already involved in this and educating them on the risk is a essential and valuable service you can provide. All right. Thank you for joining us today and for another great episode. Until the next time, I wish you the best of luck in making your credit union remarkable.