SCOTTSDALE, Ariz.—Credit unions cannot afford to ignore cryptocurrency’s momentum, which has been spurred by the Trump Administration, one analyst is saying.
Tony DeSanctis, senior director in the payments practice at Cornerstone Advisors, spoke with CUToday.info about how cryptocurrency may someday steal transactions and revenue from all financial institutions, and that could begin to be seen first in cross-border payments.
DeSanctis emphasized that CUs need to make some simple operational moves to address this emerging threat to their revenue, which could someday creep into the cards space.
“I think the question is going to be to what extent does the Trump Administration adopt and embrace crypto as a payment method, which obviously has the potential to disrupt traditional card transactions—the same way that things like real-time payments and pay-by-bank are doing already,” DeSanctis said, noting that cryptocurrency could be a serious payments disruptor, especially in the B2B space.
DeSanctis pointed to how stablecoins are growing as a means to transmit and move money across borders—moving money internationally into places where central bank stability and inflation are problematic.
Lighter Lift
Tony DeSanctis
“It creates a lower cost, lighter lift solution for some of that cross-border money movement capability. That has the potential to drive up cross-border transactions, as sort of the initial use case,” DeSanctis said.
However, if crypto begins to move into primary use cases, that’s when it becomes a concern and something for credit unions to be very aware of, DeSanctis said.
“PayPal has launched PayPal coin. JP Morgan has launched JPM Coin, largely for international. But PayPal is for domestic, obviously. Things like USDC and other stablecoins are in the marketplace already. But crypto, just like any other payment solution, is going to be dependent on scale. And unless it can get to sort of a tipping point as it relates to total scale…That's why I would call this a monitor versus an action situation, as of right now,” DeSanctis said.
But, still, credit unions should have some level of concern, DeSanctis said, noting ignoring crypto as a potential payments disruptor is a mistake. DeSanctis said if he were to rank crypto as a potential payments disruptor now, pay-by-bank is a six or seven, real-time payments is a five or six, and crypto is a three or four.
Besides monitoring the situation, what else should credit unions do?
“They should be systematic about monitoring. What I mean by that is monitoring doesn't just mean you read articles in publications. There probably needs to be somebody in the organization who's your point person for all things happening in the crypto space,” he said. “So, typically a younger person who's probably more plugged into the current ecosystem—watching things like YouTube shows and following the crypto market a little more closely, as opposed to just reading bank-based periodicals about what's going on in the crypto space. The specialty publications about the crypto space will identify risks and trends much more quickly than the traditional financial services media.”