Digital Assets, Related Technologies, & Complex Leverage Ratio

Logo for the National Credit Union Administration (NCUA)

On Thursday, the National Credit Union Administration (NCUA) Board pulled from the agenda the agency’s draft 2022 – 2026 Strategic Plan during its monthly July meeting. According to Board Chairman Todd Harper, this was a unanimous decision to give board members additional time to reach consensus on the agency’s proposed strategic goals and priorities.

Request for Information (RFI) & Request for Comment (RFC): Digital Assets and Related Technologies
The board issued a RFI and RFC regarding the current and potential impact of activities connected to digital assets and related technologies on credit unions, related entities, and NCUA.

NCUA is broadly interested in receiving input on commenters’ views in this area, including current and potential uses in the credit union system, and the risks associated with them.

The request asks a number of specific questions, including:

  • Questions regarding usage and the marketplace.
  • Operational questions.
  • Questions regarding risk and compliance management.
  • Questions regarding supervision and activities.
  • Questions regarding share insurance and resolution.

NCUA will accept public comments for 60 days following publication in the Federal Register.

Proposed Rule on Complex Credit Union Leverage Ratio (Parts 702, 703)
Earlier this year, NCUA sought feedback on simplifying the requirements of the 2015 risk-based capital (RBC) rule. Today, the Board issued a proposed rule that would provide a simplified measure of capital adequacy for complex credit unions (those with more than $500 million in assets). The proposal would allow a complex credit union that maintains a minimum net worth ratio and that meets other qualifying criteria to opt into the CCULR framework rather than comply with the 2015 RBC rule. Complex credit unions would be permitted to comply with the 2015 RBC rule if they so choose.

The minimum net worth ratio would initially be established at 9 percent on Jan. 1, 2022 and be gradually increased to 10 percent by January 1, 2024. A qualifying complex credit union that opts into the CCULR framework and that maintains the minimum net worth ratio would be considered well capitalized.

In addition, the proposal would:

  • Address asset securitizations issued by credit unions.
  • Clarify the treatment of off-balance sheet exposures.
  • Deduct certain mortgage servicing assets from a complex credit union’s RBC numerator.
  • Update several derivative-related definitions.
  • Clarify the definition of a consumer loan.

The California and Nevada Credit Union Leagues are currently reviewing the proposal, however, we are hopeful it will provide its purported benefit of giving complex credit unions a simpler option to meet RBC requirements.

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