The rapid technological advances of the 21st century are transforming the operating systems of society and leaving organisations struggling to keep up.
The co-op sector is no exception to this: one glaring example is the impact of crypto on credit unions. The global apex for the sector, the World Council of Credit Unions (Woccu), says this is “a structural shift in the architecture of global payments where powerful new rails are emerging alongside (and in some segments beginning to displace) the systems that have moved money for decades”.
To help its members find a way forward, Woccu is releasing a series of white papers; the latest looks at stablecoins – privately issued digital currencies that are designed to hold a stable value relative to a national currency.
“Money has always accomplished two goals,” says the apex. “It has stored value, and it has moved value. For credit unions, those two functions are not abstractions; they are the foundation of the co-operative model.
“Deposits, which store members’ value, are also the funding base from which credit unions lend. Payments, which move members’ value, are also the primary point of contact through which a credit union knows and serves them.
“New forms of digital money are now reshaping both functions simultaneously.”
Stablecoins are the most advanced of these, says Woccu. “Large commercial banks, payment networks, technology firms, and retailers are actively building stablecoin offerings or integrating stablecoin rails into their existing platforms.
Related: Report on the World Credit Union Conference
“Stablecoins are no longer a niche fintech experiment. They represent a re-engineering of key parts of the financial plumbing, particularly the deposit and payment functions that credit unions have always relied on, even as traditional infrastructure continues to operate alongside it.”
“For credit union leadership,” it argues, “the strategic question is not whether to add stablecoins as a product offering, but how to position the institution as the infrastructure beneath every product it offers begins to change.”
A key issue for credit unions, says Woccu, is that much of the infrastructure for stablecoins is being built by actors outside the co-op system. Technical standards and regulatory requirements are being shaped by the needs of the large commercial banks and tech firms which loom large among early entrants.
Meanwhile, warns Woccu, “if payment volume migrates from traditional rails to new private or distributed rails outside the co-operative system, credit unions risk being structurally excluded from where future payment activity will likely happen”.
Deposits that move into stablecoin wallets, it adds, “are deposits that are no longer available to fund co-operative lending”.
There is a risk to the credit union mission, the apex says. “If credit unions lose the deposit base or lose access to and influence over the payment rails members use, the primary touchpoint through which credit unions serve members is severed. The co-operative model is built on that touchpoint, and erosion of it is erosion of the model itself.”
This poses critical questions for the sector: how to maintain a central role in members’ financial lives; how to maintain economic viability; and how to leverage the strengths of the movement – member trust, community presence, and mission alignment — “to navigate a landscape that often favours scale and rapid technological disruption”.
Woccu suggests a number of options for the credit union sector.
“Credit unions can retain the member relationship,” it says, “by acting as trusted educators, safe on-ramps to new digital instruments, and regulated, accountable alternatives to uninsured platforms – especially where other market participants have limited incentive to resolve consumer confusion honestly.”
And while the transfer of deposits to stablecoin deposits is a risk, there is also an opportunity, the white paper suggests. “Stablecoin rails already enable cross-border transfers in some corridors for under 1%, a compelling member benefit and a source of non-interest income if the credit union provides the rail rather than losing the flow to competitors. Stablecoin issuers must also hold substantial reserves in regulated deposits and short-term securities — a custody and deposit opportunity for co-operative institutions.”
It also recommends the use of secondary co-ops – credit union service organisations (cusos) – to develop core systems, cybersecurity controls and compliance infrastructure.
Crucially, argues Woccu, “coordinated co-operative-sector advocacy can change regulatory outcomes … The risk is that in jurisdictions without such a pathway, frameworks calibrated to large commercial institutions create compliance barriers that co-operative institutions cannot practically meet.”
It is also vital for credit unions to have the right governance and strategy in place, the white paper says. This means “extensive and ongoing” board education, immediate systems evaluation, member engagement and risk evaluation.
There is also scope for credit unions to develop new services, such as remittance corridors, cross-border business payments, and cuso-based issuance models.
“The evolution of money is already in motion,” says Woccu. “The institutions that engage early — through education, advocacy, technology investment, and collective action — will help define its terms. The co-operative sector’s tradition of collaboration is not a constraint in this environment; it is one of its most consequential advantages. The window for influence is open, and the most critical strategic choice is to act.”
