Stablecoins: Regulatory Green Light or Strategic Sideshow? Credit Unions Must Build Beyond the Stablecoin Sandbox

Guest Editorial by Jon Ungerland, CIO and Chief of Staff, DaLand CUSO

The National Credit Union Administration’s (NCUA's) February 12, 2026, Federal Register proposal under the GENIUS Act marks a critical inflection point for federally insured credit unions (FICUs). By enabling indirect investment in "permitted payment stablecoin issuers" (PPSIs)—U.S.-formed subsidiaries licensed for 1:1 USD-backed stablecoin issuance, redemption, reserve management, and custody—this guidance provides regulatory parity absent in prior Federal Deposit Insurance Corporation (FDIC), Securities and Exchange Commission (SEC), and Office of the Comptroller of the Currency (OCC) frameworks.

Investments are capped at 1% of capital, aggregated with CUSO limits, to protect the National Credit Union Share Insurance Fund. Joint applications between parent credit unions (10%+ control) and subsidiaries demand rigorous scrutiny: financial soundness, officer integrity (barring financial felons), business plans, and AML compliance. Monthly reserve disclosures, prohibitions on misleading claims, and federal preemption over state oversight underscore a focus on safety amid innovation.

PPSIs Explained

Under the proposed rule, PPSIs function as licensed subsidiaries of federally insured credit unions—typically structured as credit union service organizations (CUSOs) for federal charters, though state-chartered entities offer some flexibility if they do not primarily serve credit unions. The GENIUS Act explicitly includes CUSOs within the definition of a “subsidiary of an insured credit union,” and NCUA’s interpretation aligns PPSIs affiliated with federal credit unions with existing part 712 CUSO requirements. This means most PPSIs in the credit union ecosystem will indeed operate as CUSOs, enabling collaborative models where multiple FICUs invest jointly (with a 10% ownership threshold triggering “parent company” status and joint application obligations). The structure isolates risk from the credit union balance sheet, leverages shared governance, and aligns with cooperative principles while capping aggregate investments at 1% of capital to safeguard the National Credit Union Share Insurance Fund.

The PPSI business model is straightforward yet powerful, It centers on regulated issuance and redemption of USD-pegged payment stablecoins backed 1:1 by U.S. dollars or highly liquid reserves (with Subpart B rules forthcoming on permitted assets). Core revenue drivers include transaction and redemption fees (kept competitive to displace legacy rails), custody and safekeeping fees for stablecoins and related keys, and modest yield from reserve management in ultra-safe instruments such as Treasuries. For a CUSO-based PPSI, the collaborative nature allows smaller credit unions to pool capital and compliance resources, share governance, and scale issuance without individual balance-sheet exposure—creating non-interest income streams while maintaining member-centric control. The model is deliberately conservative, prioritizing safety, transparency (monthly reserve disclosures), and separation from insured activities to avoid systemic risk.

Opportunity vs Risk

These concepts are hardly revolutionary; in fact, given the advanced state of competitive offerings in banking and other sectors, the PPSI framework is remedial table stakes. Stablecoins like USDC and USDT exemplify global use cases with undeniable value—trillions in on-chain volume last year, enabling near-instant, low-cost payments that outpace legacy rails. Yet they carry inherent risks: fiat peg vulnerabilities to inflation, reserve failures (as seen in past crises), and potential backdoors to Central Bank Digital Currencies (CBDCs), which erode sovereignty through programmable control. The surge in white-label and private stablecoins—branded digital dollars for local ecosystems—fuels "stablecoin mania," precisely because this is the only corner of the regulatory sandbox where credit unions have explicit permission to operate. The FDIC's bank-centric change-of-control thresholds (25% rebuttable), the SEC's Howey-test securities lens, and the OCC's uninsured national bank charters left credit unions sidelined; NCUA's move levels the field, but only marginally.

It's fun to celebrate the sandbox getting bigger and more clearly delineated via the recent NCUA guidelines.  However, we mustn’t' allow our industry to be preoccupied with building sandcastles while mega and neo-banks build moats around hardened fortresses of streaming money.  While grateful for the NCUA's advancement of concrete regs and policy, one can also maintain an intense focus on the need for further parity and progress - such as alignment with the FDIC, OCC, Commodity Futures Trading Commission (CFTC), which are positioning bankers with advantages when it comes to critical concepts like custody, crypto-backed lending, digital asset payments, balance sheet treatment of digital assets, etc.

Just the Start

Make no mistake: Stablecoins are not the end-all-be-all of digital money. They're one facet of a comprehensive strategy in the era of streaming money and distributed ledger technologies (DLTs). Credit union leaders cannot solve for this evolution by simply bolting on stablecoin wallets or repackaging Coinbase products. That's tactical complacency, risking disintermediation to fintech giants like Circle, Paxos, or Fidelity. Instead, interpret the NCUA guidance as partial clarity on responsible, sustainable integration into new money networks. It demands a bolder pivot: positioning credit unions as enduring epicenters of capital, trust, and value in local communities.

At the upcoming America's Credit Unions' Governmental Affairs Conference (GAC) in Washington, D.C., in March, I'll outline this imperative. Stablecoins serve as the doorway to the broader world of digital assets—a threshold, not a destination. Credit unions must not linger there; they need to step inside and operationalize DLTs holistically. Prioritize Bitcoin-backed loans, collateralizing with deflationary assets to hedge fiat erosion; integrate USDC/USDT with Bitcoin Lightning for sub-penny, instant payments; and adopt non-dollar balance sheet strategies to diversify reserves and mitigate currency collapse risks. Through CUSOs like DaLand, tools such as Coin2Core enable secure, compliant bridging of traditional finance (TradFi) and decentralized finance (DeFi), ensuring resilience without overhauling cores.

The strategic implications are clear: Embrace this guidance to catalyze cooperative capitalism, steward member wealth toward sovereignty, and thrive amid data wars and economic shifts. Hesitate, and credit unions forfeit their privileged role. The sandbox is open—now build beyond it. In short, keep working on staying plugged into the future of money - which will stretch beyond stablecoins alone.

DaLand CUSO is already building beyond the PPSI threshold. Our Digital Asset Gateway, anchored by the Coin2Core bridge, is structured to keep credit unions securely connected to—and actively serving—all forms of digital money and member wealth. Whether through compliant Bitcoin custody, Lightning-enabled payments, Bitcoin-backed lending, or integration with regulated stablecoins, Coin2Core ensures credit unions remain the trusted epicenter rather than cede ground to centralized fintech platforms. The NCUA’s guidance is a welcome tactical opening, but the real opportunity lies in embracing the full spectrum of DLTs responsibly. Credit unions that move decisively now to operationalize sustainable strategies will not merely survive the streaming-money era; they will define it for their communities. 

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Jon Ungerland is CIO and Chief of Staff at DaLand CUSO, specializing in fintech solutions for credit unions. He'll address stablecoins and digital assets at the GAC 2026. Views are his own.