Does cryptocurrency pose a threat or an opportunity for credit unions? Well, both. But one thing is becoming clear: As cryptocurrency moves firmly into the mainstream, becoming an institutionalized asset embraced by major financial players, the biggest threat for credit unions lies in failing to take action.
That said, entering the crypto fray isn't simply about keeping pace and preserving key revenue streams. In this episode of The Remarkable Credit Union podcast, we sit down with Randy Ralston, Partner Strategy Analyst at DaLand CUSO, to talk about how digital assets can potentially serve, rather than undermine, the “people helping people” philosophy that has driven the movement for over a century.
A fierce advocate for decentralization and equitable access to capital, Randy tackles this month's BIG question:
How can credit unions approach cryptocurrency in an effective and values-aligned way, and what do they stand to lose by sitting on the sidelines?
Katie:
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. The Remarkable Credit Union is brought to you by PixelSpoke, a digital marketing agency that works with credit unions to create user-friendly, high-converting, and award-winning websites. As a B Corp and an employee-owned cooperative, we believe that business can and should be a force for good.
Each episode, we bring on expert guests from the credit union and broader cooperative movement for conversations about the intersection of marketing and social impact. 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 better serve your community.
I'm Katie Stone, CEO and a co-owner here at PixelSpoke.
Kerala:
And I'm Kerala Goodkin, also a co-owner and the director of marketing and impact here at PixelSpoke. We're excited to delve into our big question today, which is, how can credit unions approach cryptocurrency in an effective and values-aligned way, and what do they stand to lose by sitting on the sidelines?
To help us answer this big question, we're excited to welcome Randy Ralston. He is a serial entrepreneur with lots of experience ranging from retail to manufacturing, e-commerce, real estate, blockchain mining, and business consulting, and he currently serves as a partner strategy analyst at DaLand CUSO. He is a fierce advocate for the decentralization of power and equitable access to capital. As a father of five, he certainly understands the economic and financial pressures that consumers and the financial industry face every day.
Randy, thanks so much for joining us.
Randy:
Hey, thank you for the introduction. I appreciate it. Thank you for having me on.
Kerala:
Yeah. I think crypto, Katie and I were just talking about this before the podcast, we're like, "All right. We think we sort of understand it." I do think it's an intimidating topic for a lot of people, and I just want to start with the basics here. I imagine most of our listeners are familiar with cryptocurrency. There's certainly been a lot of chatter about it, but also it seems that a lot has changed since it first started going mainstream. This is kind of another big question, but could you tell us a little bit just how the landscape has evolved in recent years? Maybe in just a few sentences, how would you describe where we are now?
Randy:
Yeah. I think, to get there, I would start kind of at the beginning. I mined my first block of Bitcoin in 2011. I had a partner. He was much more intelligent than I am. He held onto a lot of his. I reinvested most of what I mined into additional mining equipment and kind of treated it like a manufacturing operation. Fast forward a few years, I was introduced to the leadership over at DaLand CUSO where I now work. One of the co-founders was just getting into it and had been kind of a crypto skeptic to start with because the crypto purists have always been kind of social anarchists. Cryptocurrency, especially Bitcoin from the beginning, it was like kind of an invention by those who were opposing the sort of fiat currency, the use of the Federal Reserve for every dollar that's lent in the United States. They were trying to create a new paradigm.
What has sort of happened in the last two or three years is, now, a lot of that money has been institutionalized. Now, you have Vanguard and Fidelity and Chase and all of the big bankers, the big investors, they all have a little bit of skin in the game and they all have their fingers in the pie now. Within the last especially probably year and a half, two years, with the inception of the ETFs, like the iShares ETF and then whatever the BlackRock ETF is called, those are some of the most successful ETF launches, I think actually the most successful ETF launches in the history of the stock market. Literally, tens, if not hundreds, of billions of dollars have inflowed into these new investment vehicles within the last couple of years, and we've seen the price go up if you followed it at all.
We hit a point where we were like 20,000, 40,000, 60,000 and then everything dropped off. I think this is about the time of the FTX collapse, and people said, "Okay. Bitcoin is dead. It's only worth $16,000 now. It's never going to go anywhere," and I'm thinking, "I was first buying it when it was like 60 cents, so $16,000 doesn't really feel like death." I got back into the market about the time that it, quote, unquote, "collapsed," and so I've been sort of faithfully repurchasing, reallocating. I've watched it go up. Actually, I was one of the many, many people, I'm not the only one, but one of many people that predicted, post-ETF launch, we would see Bitcoin prices exceed $100,000, which is sort of an interesting milestone. We'll get into this a little bit later.
Based on the total number of Bitcoin that have been mined or that will ever be mined, I think we're at 20 million of the 21 million. So that means that within the next five to eight years or it might even be 10 years off, we will hit the max of 21 million. An interesting side note there is there's only about 16 million in circulation, so you have a good, what is that, 20% or something like that that have been lost to the loss of private keys and so on and so forth.
A lot of people are afraid to get into this market, but they feel like they can do that safely with the ETFs. People like my mom or my dad, the sort of baby boomer generation, I've had conversations with a lot of these people who are like, "I would love to get in, but I don't really want to store my life savings on a thumb drive that is potentially going to fail when I plug it into my computer and the voltage is wrong." A little bit of a long-winded answer, but I want kind of pause there and ask, am I kind of getting at what you're asking there?
Kerala:
You are. And also, for the benefit of listeners who might be a little intimidated by this whole space, can you clarify what ETF is?
Randy:
Sure. An ETF is an exchange traded fund. These exist for pretty much all the commodities markets, so silver, gold, copper, so on and so forth. I believe Ethereum just got one approved. I think maybe even XRP and Hedera, which are also kind of alternative cryptos, they've gotten approved. Bitcoin or BTC, I'll use those interchangeably, that was actually the first cryptocurrency that was approved for an ETF.
Kerala:
Got you. All right, thanks. That's super helpful. And then, Randy, you touched on this a little bit, but I'm curious to know more about how financial institutions outside the credit union movement are integrating digital assets into their core operations. And also, based on what you just shared, is this a little antithetical to the original spirit of the movement since it's sort of becoming a more mainstream asset for financial institutions?
Randy:
I think yes and no. Let me say this out loud. No one who has... We call them HODLers, right, HODL, hold on for dear lifers. No one who is holding on for dear life is complaining that Bitcoin is now, I don't know what it is today, like $92,000 or something like that. No one is complaining about that. Simultaneously, yes, some of the institutional adoption is antithetical to the original purist movement. I would bet. I am a betting man, and I would bet that they're going to get over it. I've seen upside predictions of upwards of half a million, million dollars. If you listen to Michael Saylor at all, he thinks and is investing his money and his investors' money into Bitcoin with the assumption that it's going to go up by about 20 to 28%. I think it's his target per year. I'm not necessarily in that category.
I think there's a lot of utility and a lot of value. Obviously, it's not a physical piece of metal, so it doesn't have the same sort of intrinsic use as gold or silver. The reality is gold doesn't have a whole lot of intrinsic use cases either other than as ornamental or in jewelry. To me, part of the original use was to create an economy based on a limited supply of money that is globally fungible. I can create it anywhere. I can send it anywhere almost instantaneously for a really, really low fee. It doesn't exist to perform any other utility other than to be money in its purest form. A part of the original design that we're seeing kind of come into play here.
Let me answer your question. I like to talk about Jack Dorsey and Block/Square. His company, any coffee shop you go into, you'll see one of these Square either card readers or scanners or whatever. The last one that I was at was at a pastry shop, because the last one I saw was at a pastry shop, there was actually a QR code on the reader or on the screen, I guess. I now actually had the option to pay using the Bitcoin Lightning Network at this pastry shop here in Lincoln, Nebraska. These people are not crypto nerds. They're not social anarchists. They're not anarcho-capitalist. They're wearing hair nets and face masks and trying to keep my food as safe as possible and making gluten-free dairy-free cookies that my wife can eat, right?
Kerala:
Okay. Yeah.
Randy:
The mainstream adoption is hitting shops like this. And the coffee shop next door, they also have Square, same exact thing. To the degree that those... I think there's about 6 million small to medium-sized businesses that all use the Square technology. Those are all being allowed to utilize the Lightning Network for low-cost payments.
Let's dive a little bit deeper into that. What that means is, now, banks and credit unions are completely cut out of that interchange, right?
Kerala:
Yeah.
Randy:
So there's no settlements, agents. There's no interchange fees. All of this happens in real-time on whichever network that consumer or that merchant is using for payments. Whether that's Circle for a stablecoin or whether the merchant wants to accept Bitcoin, those are happening in real-time and it only costs them either a few cents or, in some cases, a fraction of a cent for the transaction. That cuts a lot of revenue out of Visa, Mastercard, banks, credit unions, all the institutional sort of norms that we're used to. One of the things we're doing at Daland is trying to help credit unions stay connected to some of those payments rails and preserve some of that interchange. Because I don't think it's possible to preserve the entire thing, but what I do know is, if you're not connected to those nodes and the future of money, you're not going to be able to preserve anything, so you're completely out.
Kerala:
Well, that was really helpful. That helps break it down for me, for sure.
Katie:
Yeah, and I think it's a perfect segue. I am interested in bringing this background to credit unions and what does that mean for them. In your CUInsight article, you talked about this, very similar to what you just said. You said that, "The real problem is that it's not about the technology stack, it's about data, control, and relationships. Every time a member moves money into someone else's wallet or exchange, you lose more than dollars." You were just talking about more of the financial implication of crypto and stablecoin, but can you talk a little bit more about what else credit unions stand to lose?
Randy:
Sure. We already touched a little bit on, do the math, 20 million Bitcoin at 100,000 a piece is 2 trillion in liquidity. Banks and credit unions run on liquidity. We have two or three maybe primary sources of income as a financial institution, one, interest income from loans. Those loans can't be made if I don't have access to the liquidity that underpins them. Two is probably interchange for a lot of banks and credit unions, and we just talked about that a little bit. And then three, fee income or... We'll put fee and then everything else into its own category. That represents a minority of the revenue that comes in.
What I would say, and what I do say to credit unions who get on the phone with me, is you basically have three or four, I think, pretty good use cases looking at what the market has already done. Number one, a bank, if you rewind 500 years, 1,000 years, it was meant to be a sort of storehouse or a warehouse for gold bars or whatever wealth people possessed. We have a similar version of that with the idea of a safety deposit box, people can put things in there, but banks very quickly realized that they could lend against whatever was on deposit with them. They would give these IOU notes. I don't have to give you the entire history of banking, but that's where we get bank runs and that's why we have the Federal Reserve and all of this.
In this case, we're kind of going back to, in some ways, where we started where a member can bring their Ethereum, their Bitcoin, their USTC, whatever their digital asset of choice is. They can bring those into the financial institution that they already trust, and so the credit union can actually leverage the relationship that they have with the member. Hopefully, they're doing that by way of education because a lot of people are afraid of this. They don't really understand it. I want to go back to actually the very, very first part of this conversation. Cryptocurrency is effectively nothing more than a digital ledger. The difference is that a bank's ledger is centralized and a blockchain or hashgraph ledger is decentralized. It's validated or verified by nodes outside as opposed to nodes inside. That's the only difference, so there's nothing about crypto that should scare people except for losing your keys.
Katie:
Right.
Kerala:
Yeah.
Randy:
Here's where we-
Kerala:
I've heard some stories.
Katie:
Yeah.
Randy:
Oh, I've got some stories. I was a victim of the original Mt. Gox. We affectionately call it Mt. Gox attack, which was an inside job where like 800,000 Bitcoin went missing. I personally lost like 20 BTC in that attack, and that's one of three exchanges that I've had the privilege of having Bitcoin on deposit, either via trading or just trying to keep them safe that have gone, just disappeared overnight. I've probably lost more money in Bitcoin in today's denomination than I've ever actually earned in my lifetime, I mean millions and millions of dollars.
Kerala:
Wow.
Randy:
That is partly why I'm passionate about this because one of the solutions credit unions can provide is they can provide what we call digital vaulting. As a member of a credit union, I don't really want to have to go out to Coinbase or Kraken or Binance or the payment aggregators or whatever and hope that those honeypots don't get hacked. What I want to be able to do is walk into my local credit union and say, "Hey, I've got, call it, 50,000, $100,000 worth of whatever crypto asset. I would love to store it here, and I'm willing to pay you a small fee for that."
One of our sponsor credit unions, that's what they're launching in end of month. I would love to come back on and talk about member adoption rates and revenues that they are able to earn from that and all of that. It's a nominal fee and it's insured becasue they have a partnership with Lloyd's of London that actually ensures the crypto deposits up to a certain amount. They're also taking the next steps to go from not just safekeeping of a member's asset, which I actually think is a huge use case, they're going to take those and they'll be ready to put them on the balance sheet as soon as the regulators give them a green light, and then they'll be able to use those to generate interest income. So, now, we're talking about revenue from safekeeping plus revenue from the liquidity access that they have.
I think, very quickly, what you'll see is three things, a market that does support a small fee for the safekeeping of an asset, so this happens with every other commodity in the entire world. For some reason, with money, we expect to get paid to store our assets in a bank as opposed to expecting to pay the bank for the assets. Right?
Katie:
Yeah, good point.
Randy:
I think that's interesting, but that is because they can lend it out sort of with our permission at a whatever interest rate, but there are opportunities for safekeeping and revenues that will come from that. And then there are opportunities from connecting to those liquidity pools and collateralizing car loans, maybe even mortgages, against them. And then I think, third, we're going to see the use of crypto in the payment space. And if the credit union and the bank is plugged into those networks, they'll be able to charge a small fee basically to perform the functions of either an on-ramp or an off-ramp.
I think there's at least three... I'll get to the fourth at the end of the conversation. That's the exchange piece where we actually cut Coinbase completely out of the conversation. But for sure, those three are kind of traditional within the banking model, and there's nothing scary about them as long as the bank can integrate those directly through whatever OLB provider they have. If I can log in and I can see my member shares, my savings shares, my checking shares, my loans, and then all my cryptos, and use those interchangeably, all of a sudden that space becomes a heck of a lot easier.
Katie:
Absolutely, yeah.
Randy:
That's I think the future that I'm looking forward to.
Katie:
Randy, I want to go back just a second.
Randy:
Yeah.
Katie:
Credit union you were talking about is, I assume, St. Cloud FCU, the one you mentioned in your CUInsight article, great. I'm just curious to know, are a lot of credit unions moving towards digital asset vaults, or are they kind of an outlier in the industry? Is this a budding trend or are they the first ones to really kind of stick their neck out there?
Randy:
It's kind of funny. The CEO, a friend of mine, Jed Meyer. He's a great guy, visionary. Not a crypto guy, he says that on every call. He's like, "I'm not a crypto nerd," or whatever. I don't think he intended to be on the bleeding edge in this space. However, he and then his chief lending officer, Chase Larson... Chase, he's been in this space for close to as long as I have, and so he's seen a lot of the movement and holds a bunch of different types of cryptocurrency. They're able to see where the market is going, and so they have sort of found themselves as the front runner in the industry. I'm not going to say by accident because that's not super respectful, but it's not their intention to be bleeding edge. What they did is they said, "Okay. Well, this is obviously where everything is going, so we're going to implement a solution for it."
To answer your question directly, yes. I've had 30, 40, 50 different credit unions that have wanted to have conversations or get an hour-and-a-half or four-hour digital asset seminar from our team or where we've gone on site and we've presented and talked to them at length about what they can do, can't do, what the potential revenue is. A lot of it comes from they are losing deposits, so there's a substantial amount, somewhere between 3 and 6% per year, depending on the credit union, that's being lost to these payment aggregators and the exchanges. If you're $1 billion shop, well, that starts to add up really quick.
Our license is just not that expensive, so it's not too hard to at least put some sort of a bandaid on it and say, "Okay, we're going to maybe not stop deposit bleed, but we can stem it," and that I think is where St. Cloud finally said, "Okay. Yep, we're going to go all in." So they already had a relationship and an engagement with DaLand, and then they became a sponsor credit union I think maybe six months to 12 months after that original engagement.
So, that's what we're seeing is a lot of... We actually have, I believe, four credit unions now that are our sponsor credit unions, and those represent the three, what we call, the most modern in cores that are out there. I've had multiple conversations in the last week with additional credit unions who are interested in finding out more. They're asking the same question you are, "How can we make money on this? How are we going to lose money if we don't do this? Why do we need to get connected to these things?" Because the distributed ledger networks or DLTs, they don't need the banking systems to survive, but the banking and credit union system needs the liquidity that's out there on the DLTs.
I get some pushback like, "Well, I don't understand why we need to get connected to these things. They don't need to have access to the traditional banking models," and I tell every CEO the same thing and it's, "They don't need you. You need them. Here's why, because interchange is dying, liquidity is drying up, your deposits are bleeding out, and you don't have a method for even giving your members the ability to buy and sell these assets. Wouldn't you want to do all of those things at a profit?"
Kerala:
Yep.
Katie:
One of the things we hear from credit unions time and time again is that a goal is increasing wallet share, right? So if you don't have a product related to cryptocurrency, you're probably missing out on a share of everyone's wallet.
Randy:
Yes, 100%.
Kerala:
Zooming out a little bit, this is a topic that comes up again and again on this podcast and something we think about a lot.We're a technology company. We build websites. We also feel really invested in this people helping people philosophy that's so central to the credit union movement. Some innovations these days seem potentially at odds with that. Certainly AI, there's a lot of questions around that. I'm curious, we've talked a lot about digital assets or crypto just as a way of not getting left out, do you think there are ways that they really fundamentally align with the credit union mission and vision?
Randy:
Yeah. To a certain degree, yes. I just referenced the networks are called decentralized ledger technology networks. Right?
Kerala:
Mm-hmm.
Randy:
In a lot of ways, the credit union movement is kind of the same thing. It is a decentralization of capital, which really is a localization of capital. The idea that, "Not your keys, not your crypto," I think applies within the credit union movement. That's kind of like, "If the capital isn't kept locally, then you're not going to have access to do what you need to do with it the same way as you would have." I know it doesn't look exactly like it did when 100 people deposited their money and Frank wanted to buy a Combine and then he used that to harvest and then paid it back, and now JOE wants to buy a few cars and start a used car a lot or whatever. It's not quite that simple. But I do think within the sort of mindset of the credit union movement, I think there are some similarities between those of us who are pro decentralization of that capital and those who are pro the localization of the same type of capital.
Kerala:
Mm-hmm, yep.
Randy:
That's, I think, how I would say that.
Katie:
I want to pivot a little bit. Something that I talk to our clients about a lot when we kick off new website redesign projects is this idea that a smart person can learn from their mistakes, but a wise person learns from other people's mistakes. I'm just curious, in your experience working with credit unions, are there any potential gotchas that credit unions should be aware of as they embark on this journey? Are there any lessons that some of the credit unions you've worked with have learned the hard way? What should folks be looking out for?
Randy:
I think, from my own experience, I can speak to the need for redundant layers of security because these transactions are irreversible. The way that our product is built, we actually split up the key. It never exists in one place. It never exists without being encrypted, and it never only exists in one place. We actually split the key, encrypt it, and then we store it redundantly, and we utilize the same credit union policies that are in place, same thing that they would use to protect their member information or a deposit account or a Visa card or whatever. We're using the same policy to protect that. That's important.
What we really want to do is provide a system in which there is never a single point of failure. There's never a CIO, a CFO, a CEO that has the administrative rights to go in and recompile a key. All of a sudden, even though we have, let's call it, 5,000, 10,000 different member, individual wallets that are created, if one person had access to be able to recompile the keys for all those wallets, they could, in one fell swoop, go out and take a basically permanent vacation to, let's say, Greenland or whatever country that Trump tries to buy next. We want to avoid that. I have been party to or have seen firsthand what it looks like to be a victim of a single point of failure because too many Bitcoin were held in one wallet with one person that had access to that for whatever reason.
I think security and safety is a big deal. The regulators will follow as long as the credit unions are doing the right thing. I think it's actually super fair to... St. Cloud has had our solution live in their own environment for the last 12 months to friends and family, but they have been having ongoing conversations with the regulators before they go live to their entire membership.
And I think that's valuable, right? It would be nice for me to be able to talk about how I have my sponsor credit union. They're wildly successful. It's simultaneous, not moving too quickly or too slowly. Because there is going to be a cost of waiting, but there is also a cost to just jumping in. I would like to think our team has done a lot of that upfront work. We can assist with that education. The folks at St. Cloud would love to talk to anybody who they're interested in learning more about their journey. I think with an ACH transaction or an EFT transaction, typically, you have 24 to 48 hours you can reverse them. If somebody commits fraud on your credit card, you can cancel it and you can charge back. You have a disputes process. That doesn't exist in this world. It's just a completely different mentality that requires both more security and then more responsibility.
I would say, number one, don't wait too long because you're going to get burned by deposit bleed and interchange fees that dry up. Number two, do your due diligence, do your homework, and make sure that whatever solution you put into place, hopefully it's ours, there is no single point of failure. There are hopefully not just two FA, but multiple layers of security prior to allowing a member to send those tokens. Because once they're sent, they're gone.
Katie:
Great, thank you.
All right, well we have some rapid fire questions for you to wrap this up. I'd love to hear, what was your last Halloween costume?
Randy:
Okay. Every year, my family goes out and we help... We have a homeschool family that we've been friends with for 20 years, and they have a giant party. It's like 1,000 people, and they have kind of a woods in the back of their house, and we set up a spook trail. Every year, there's about 25, 30 of us adults that get set up as different, whatever the theme is, characters on that trail. I think this last year, she was doing a carnival theme, and I believe my last costume was Scary Clown, and I should send you pictures because it's not pretty. I scare them out there with my music going. I'm literally waiting for 10 and 12 and 14 and 16-year-old kids to come by, and I'm behind trees or in the absolute dark, and come out and chase them down with my plastic sword or honker or whatever. We have a great time.
Katie:
That's awesome. Please do send that picture. I think it's really important that we include those in the show notes.
Kerala:
I was going to say the same thing. Scaring my children is one of my favorite things to do, so it sounds like a lot of fun.
Randy:
It has gotten harder as... They're each getting older, right, every year?
Kerala:
Yeah. That's a new challenge.
Randy:
It was great seven or eight years ago. The last couple of years, I'm like, "You guys are killing me. I'm doing everything I can here." I'm throwing plastic spiders and grabbing people's ankles and...
Katie:
That's great.
Kerala:
Love it.
Katie:
All right, something not so scary, or maybe it is, what is the song that you're most embarrassed to admit that you like?
Randy:
I didn't realize this until about December 20th, but it is George Michael's Last Christmas.
Katie:
Of course.
Randy:
I worked in grocery for 25 years, and I would hear that song on the radio and I hated it. Now, since I've been out, I have found myself just... My kids and I will just blare it. We love it. I posted about it on Facebook, and all of my friends came out of the woodwork and they're like, "You like that song?" I'm like, "Yeah." I got to just own it.
Katie:
That's awesome.
Kerala:
Nice.
Katie:
Okay. And then, finally, what is your life slogan?
Randy:
Yeah, empowering others to be the best versions of themselves.
Katie:
Awesome.
Kerala:
That's great. All right. Well, let's do our final take. Just as a reminder to our listeners, our big question today was, how can credit unions approach cryptocurrency in an effective and values-aligned way, and what do they stand to lose by sitting on the sidelines? This is probably the biggest challenge we're going to throw your way. But in just a few sentences, can you summarize your thoughts on this very big question?
Randy:
As we talked about, there are similarities between the decentralization of this capital and the localization that credit unions represent. I don't think there is a way for a credit union to get into this market that is against their values. What I would say is, to be the most effective and efficient, these assets need to be integrated directly into the core of the credit unions operations. Don't rely on a third party, don't rely on a honeypot, don't rely on a bolt-on, don't create data silos. Instead, find a way, find a partner, who understands this technology and can integrate this directly into the core banking operation. Now, what do they stand to lose? Deposits. Young members, especially 55% of Gen Z, would prefer crypto than traditional investment products.
Katie:
Wow, that's high.
Randy:
Let's keep our members and attract young members. Let's keep our deposits, interest income, interchange income, traditional fee income. All of these things I think are going to take a hit if a credit union leadership team does not properly position their financial institution for success in this arena.
Kerala:
Well, thanks so much. I learned a lot. I actually feel a lot less intimidated by this topic now. I'm looking forward to the next dinner party. I really appreciate you breaking this down for us. Yeah, thanks so much for joining, Randy.
Randy:
Yeah, you got it. I appreciate you both, and you have a great day.
Katie:
Thanks.
Kerala:
You, too.
Well, I hope you learned as much from that conversation as I did. Let's see if we can distill that into three key takeaways. I think, first and foremost, it's really important to just acknowledge that cryptocurrency is rapidly becoming an institutionalized asset. And yes, that is somewhat ironic considering that crypto came into being as sort of the social anarchist, anti-establishment movement. There's no question that it is now moving into mainstream finance, and quite quickly. We've seen stablecoins and other digital assets being embraced by major financial players, and there's already billions of dollars flowing into this market. What does that mean for credit unions? Well, it seems like if you want to avoid deposit bleed and keep money local, it's time to take action. Already, as Randy pointed out, the credit unions that are not engaging with digital assets are losing 3 to 6% of their deposits to third-party exchanges and aggregators.
Not only that, but these decentralized payment networks, like Bitcoin Lightning, are just bypassing financial institutions all together and cutting off key revenue sources. How to get started? It's rather overwhelming. It seems like the lowest hanging fruit for credit unions at present is digital vaulting. That means that you can leverage the strong foundation of trust that you've already built with your members and offer to safeguard crypto assets for a fee that protects members from losing private keys or falling victim to exchange hacks and potentially, further down the road, pending regulatory approval. These vaulted crypto assets can be put on the balance sheet and leveraged as liquidity to generate interest income or to collateralize loans, like car or mortgage loans.
So thanks for joining us today for another great episode. The Remarkable Credit Union is brought to you by PixelSpoke, a digital marketing agency that works with credit unions to create user-friendly, high-converting, award-winning websites. As a B Corp and employee-owned cooperative, we believe that business can and should be a force for good. You can learn more and check out our work at pixelspoke.coop. That's pixelspoke, all one word, .coop.
Until the next time, I wish you the best of luck in making your credit union remarkable.