Decentralized finance (or DeFi)  was originally intended to cut out the middleman like a bank or credit union, but Mountain America Credit union wants in.

“Some may fear that DeFi’s goal is to upend the traditional reliance on a central hub of financial operations,” Mountain America’s recent whitepaper reads. But Mountain America Credit Union (MACU) leadership sees an opportunity in the changing world of finance.

“Credit Union = The OG DAO.” That’s what MACU printed on shirts that were given away at Utah’s Cryptopia event. For context, DAO stands for decentralized autonomous organization. It’s an organizational setup that, when done properly, means decisions are made by a community of members, not a central leadership group. 

Credit unions offer similar services to banks but are nonprofits owned by members who use their services.

“A DAO done properly is a group of people who are treated equally—that’s decentralized in the sense that everybody has equal voting power, and they’re able to then influence, drive, and manage the entity they’re a part of,” MACU CTO Marcus Daley says.

Credit Unions, Daley adds, were originally developed as a way of providing financial services to people who wouldn’t otherwise have had the financial means to access those services. When people pooled their capital together in a group, they could gain some financial power. 

“They were treated as an equal member of the cooperative,” he says. “And in the spirit of a DAO, that really is what a DAO is about.”

In Daley’s opinion, there are only two main differences between a credit union and a DAO. One is that voting at a credit union takes place in an analog manner, with paper contracts as opposed to smart contracts. The other thing is that there are statutes that force a credit union to act in a certain type of way. Other than that, the two structures are very similar.

With this in mind, what does a credit union like Mountain America do with cryptocurrency? 

The Utah-based credit union has 102 locations across six states, with 72 of those locations in Utah. It boasts over a million members on its website. Of the members Daley has encountered, most want some sort of third-party intermediary when dealing with cryptocurrency, and that’s probably not an anomaly.

According to an NYDIG survey, about 22 percent of Americans own Bitcoin. Of those people, 80 percent would store it with a bank or credit union if they had the option and 71 percent of holders would switch to a bank or credit union if it supported Bitcoin.

Daley encourages people to push forward without a third party if they feel comfortable with the current non-custodial user experience for cryptocurrency, which often includes using a hardware wallet and storing cryptocurrency on a jump drive. But for those uncomfortable with navigating that world, credit unions like Mountain America might be able to provide some support

“Today we don’t do anything in crypto, but because so many aspects of how we operate are very similar to crypto, what we’re finding is a lot of people are very warm to the idea of being able to custody with us and then have the option to go out on their own when they need to,” Daley says.

Currently, a cryptocurrency exchange like Coinbase can’t offer the typical banking services that a credit union can, and a credit union can’t serve as a crypto exchange. At some point in the future, it’s possible the two won’t be as far apart on that spectrum, and both will be able to offer some of the same services.

And having a credit unions’ involvement in cryptocurrency can help filter out high-risk investments, Daley says. He has seen firsthand the risks of a bad cryptocurrency investment. In 2021, he put what he describes as “much of [his] net worth” in a stablecoin called Iron. Stablecoins are digital assets that are supposed to stay pegged to the US Dollar or another currency while offering some sort of consistent return to holders. Iron lost its peg to the dollar and investors like Daley lost a significant amount of money.

Losing so much of his money left him depressed and unsure how he was going to recover, Daley wrote in a recent blog post.

“What I decided to do was to understand, ‘What did I miss? How did I fall into that?’” He knew the identities of the team behind the stablecoin, he knew the code they were using, so he wanted to figure out what he could have done differently. 

In a perfect world, a third-party group could help filter out risky investments before the investments went wrong, not that it could eliminate all risk. People can still be fooled and investments lose value all the time. 

While it may not have stopped him from diving headfirst into Iron, Daley believes some sort of risk assessment service is missing in cryptocurrency, similar to what groups like Moody’s or S&P Global offer for traditional investments like stocks and bonds.

“Those discussions are happening at different levels within some of these traditional risk assessment firms, but as of yet, nobody has delivered a reliable risk assessment technique—not because it can’t be done, but because this is such a nascent industry it just hasn’t happened yet,” Daley says.

That’s just one of the many changes that could be coming to the crypto world. Whatever other changes may come, Daley believes Mountain America will be ready, although what services the credit union ultimately ends up offering will be dependent on what members are asking for.

“I do think ultimately—and this is why you don’t see a crypto product from us yet—we do have a responsibility to make sure that we truly believe it is going to offer the best outcome for the member,” Daley says.