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US Credit Unions Will Use DLT to Expand Payments Business

CULedger – the credit union services firm that grew out of a blockchain-focused consortium effort – is partnering with DLT startup Hedera to build a public system for cross-border payments.

Unveiled Tuesday, the deal will see the two firms collaborate on a public network based on Hashgraph, a kind of distributed ledger technology (DLT) created by the software company Swirlds.

The Hedera Hashgraph will be paired with a new global identity solution, MyCUID, in an effort o build what CULedger calls “a comprehensive system” for identity and global payments.

Rick Cranston, COO of CULedger, states the current cross-border payments as a “painful” process for parties involved, due to its high costs, limited visibility into transactions and more time involved.

He went on to say:

“Hashgraph is fast and it provides visibility between the two parties at a significantly lower cost. It also eliminates concerns regarding fraud and default, since transactions are recorded immutably on the public ledger, and manual processes, since transactions are automated via smart contracts.”

“CULedger continues to lead the financial services industry in innovative ways to apply distributed ledger technologies to the huge challenges that financial services firms and individuals face in making timely, secure, cost-efficient payments, be they across the country or around the world,” Mance Harmon, CEO of Hedera Hashgraph, said in a separate statement.

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CULedger, Evernym Release Digital ID Blockchain for Credit Unions

CULedger, a consortium of credit unions in the U.S., and Evernym, developer of distributed ledger technology, have introduced a new DLT-based digital identity system.

The software, known as MyCUID, is billed as a way for credit union members to protect themselves from identity theft and fraud. The ledger will enable users to share only as much personal information as they need or want to in a given situation.

CULedger president and chief executive John Ainsworth said in a press release that the system would allow customers to “securely interact with their credit union,” continuing on to say:

“By giving individuals control over their personal identifiable information, MyCUID will create a truly secure and privacy-preserving flow of information to promote balance, fairness, diversity and competition in the digital economy.”

MyCUID operates through a person-to-person network of “distributed, private agents working in parallel with the distributed ledger,” according to the press release. This will help ensure that users’ identity records cannot be taken away from them.

If widely adopted, the software will enable credit unions worldwide to provide banking services to an estimated 2 billion people who currently lack access to financial institutions, said World Council of Credit Unions president Brian Branch in the press release.

CULedger is a nationwide consortium, having begun “in 2016 as an endeavor between CUNA, Mountain West Credit Union Association, and Best Innovation Group to develop a concept for a credit union system-wide permissioned distributed ledger platform,” according to the press release.

It’s been working with Evernym, which created the Sovrin protocol, since at least last year. Evernym is one of a number of startups seeking to use distributed ledger technology to create “self-sovereign” identities fully under users’ control.

The release of MyCUID appears to be the latest move in the consortium’s efforts to change how credit unions handle personal data, after forming a credit union service organization last year.

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Credit Union Trade Body NAFCU Joins Enterprise Ethereum Alliance

The National Association of Federally-Insured Credit Unions (NAFCU), a U.S. trade organization, has become the latest member of the Enterprise Ethereum Alliance (EEA).

With the move, the body joins over 300 businesses that have already signed up to the consortium, pooling efforts to build enterprise-focused distributed ledger technology (DLT) that is compatible with the ethereum blockchain.

NAFCU, which also joined the Hyperledger blockchain consortium in October, will see its cybersecurity and payments committee engaging with EEA’s members to discuss how credit unions can get more deeply involved with the blockchain ecosystem, according to a press release.

NAFCU president and CEO Dan Berger stated:

“With this new partnership, NAFCU hopes to bring critical knowledge of blockchain technology to the credit union industry and create an innovative environment where NAFCU members can inform technology firms of what credit unions need most.”

More than 50 companies have joined the EEA in the past three months, including Hewlett Packard, Australian Digital Commerce Association and Sberbank. More recently, oil and gas supply chain management platform PetroBLOQ became a member of the group on Monday.

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Former Mastercard Executive Joins CULedger Consortium as CEO

CULedger, a consortium of credit unions developing distributed ledger technology (DLT) systems, has announced the appointment of a new chief executive officer.

The new hire, John Ainsworth, who was previously Mastercard’s executive vice president of North America markets, will be joining the company as president and CEO effective Dec. 18, a company announcement states.

Ainsworth said in the statement that the majority of his financial services career has been involved with helping credit unions meet the needs of its members.

Predicting more change in the next 10 years than we’ve seen in the past 50 years, Ainsworth further stated:

“Staying relevant in the age of digital disruption is a current and present challenge for the credit union industry.”

DLT will give the credit union industry a competitive edge in the growing financial services sector, he continued, adding: “Credit unions will be able to implement the technology and utilize the current and future applications that run on it.”

Unveiled late last summer, CULedger is backed by over 50 U.S. credit unions that work together to utilize blockchain technology in a bid to improve the functioning of their industry.

Earlier this August, the consortium launched CUSO, a blockchain services business, owned by a group of federally chartered credit unions that offers payment card processing, business loans, among others.

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, in which Mastercard is an investor. 

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US Regulator: Cryptocurrencies May Pose Risks, Rewards for Credit Unions

The US federal agency that oversees the country’s credit union industry included a remark on the possible risks and benefits of cryptocurrencies in a newly-released strategy plan.

Published yesterday, the 2018-2022 Draft Strategy Plan largely focuses on the economic trends that will shape US credit unions, as well as the policy implications that may come about as a result. The growing use of fintech means that “credit unions are likely to face a range of challenges” from companies that are advancing products and services in this area.

According to the text, the potential for the wider use of cryptocurrencies is cited as one of the technology factors that could drive change in the way that credit unions do business.

“The emergence and the increasing importance of digital currencies predicted by many analysts may pose both risks and opportunities to consumers, credit unions, banks and financial regulators,” the report’s authors state, adding later: “These trends are likely to continue, and even accelerate, through 2022.”

Though the draft doesn’t mention it, a number of credit unions in the US have already moved toward exploring how they can apply the technology that underlies cryptocurrencies like bitcoin to their own operations.

Last year, a group of institutions unveiled the CU Ledger project, aimed at creating new services built on top of the tech. And just last month, the consortium of more than 50 credit unions revealed their plan to create a credit union service organization, or CUSO, and have since been seeking investors for the venture.

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