On this episode of The Credit Union Connection, host Sarah Snell Cooke sat down with the COO of BankSocial, Becky Reed, to discuss the growing popularity of stablecoins and their potential to disrupt the traditional payments space.
Becky first came upon blockchain when forming Pure IT, a CUSO that the credit union she ran at the time founded. What she soon discovered about blockchain was its decentralization, and this quickly led her to conduct even more research into blockchain technology. Becky also learned about the various types of cryptocurrencies out there, and how they are disrupting the current traditional payment system. (Continue reading the article below the video, but you know you want to watch for all the details first!)
The most famous of all the cryptocurrencies, Bitcoin, was originally created to be a new form of self-custodial money. Today, like many other cryptocurrencies, it has become a commodity that is regularly traded and, depending on the conditions, can increase or decrease in value. This volatility in terms of value doesn’t make cryptocurrencies a viable digital alternative to more traditional payment methods. However, in the case of stablecoin, it is backed by a flat currency that doesn’t radically change value, such as the U.S. dollar. This means that it can more easily enter into a payments role without the whims of the market suddenly changing its value.
What’s more, with the passage of The GENIUS Act in the Senate, stablecoin is one step closer to being a more usable payment token. The legislation defines what stablecoin is, how it can be used and how it should be regulated.
As for what this all means for credit unions, it goes back to what you do every single day: move money. Blockchain and stablecoin also allow for the movement of money, just in a digital space, and it is precisely the reason why credit unions can’t afford not to pay attention to it. Not only is it less expensive than other traditional payment systems, but it’s also faster and more secure. Security is especially important to have, as fraud continues to wreak havoc in the financial services industry.
Blockchain and stablecoin are payment innovations that are not going anywhere anytime soon, so Becky recommends that credit unions take the time learn about the technology by downloading a digital asset app and using it for themselves. She also recommends that after learning about stablecoin that credit unions figure out a plan to integrate digital asset rails into their systems by 2026.
Disclosure: Transcript below is automatically generated
Sarah Cooke 0:00
Hello and welcome everybody. I am Sarah Snell Cooke, your host here at The Credit Union Connection, and I am here with Becky, the Becky Reed. Welcome.
Becky Reed 0:17
Hey, Sarah.
Sarah Cooke 0:19
Oh gosh, it is so exciting to see you here today, because we have, we’re going to focus. I mean, AI has kind of shifted the focus, but now we’re going back. We’re going back to blockchain, distributed, distributed ledger technology, with the legislation that’s been moving through Washington. But first, Becky, why don’t you talk a little bit about your role there at BankSocial, and what you’ve been doing.
Becky Reed 0:45
Alright, so today, I am the Chief Operating Officer at BankSocial. We are a FinTech that is also a CUSO. So we’re owned by credit unions, and we serve credit unions, also community financial institutions, which otherwise known as banks, right, for financial services, and we do a lot in the blockchain sector. We have a digital asset exchange, we have a stable coin, which is kind of what we’re going to be talking about today. But we’re a payments platform, basically, for both traditional payment tech as well as emerging payment tech. And of course, my almost 30 year history prior to coming to BankSocial was in the credit union space, and I’m a former credit union CEO.
Sarah Cooke 1:32
Yeah. And so what attracted you to become, or just to dig so deep into the whole Bitcoin, Bitcoin blockchain tech coming from being a credit union leader?
Becky Reed 1:45
Yeah, well, in, to, about 2015 2016 timeframe, I was doing a lot of work with Pure IT, which is a CUSO that I co founded, whenever I was at LoneStar, and we were doing a lot of network remediation and a lot of cloud networking stuff, and I came upon blockchain. And what I learned about blockchain, which I really couldn’t have cared less about Bitcoin, to be honest, but blockchain fascinated me because it was a decentralized network, and so I really started doing a bunch of research on that and figuring out what the heck really is this thing. And once I learned about Bitcoin, while I didn’t care about it from an investment perspective, when I looked at all the other cryptocurrencies that were available at that time too, on Ethereum in particular, I was like, Wow, this looks like a new payment network. This is going to completely disrupt payments in in the financial services area. And so that’s really what started it, and I’ve continued to stay interested and stay curious and learn more about it as it grew and matured and evolved, and what I thought is actually coming true, it is absolutely already disrupting traditional payment systems.
Sarah Cooke 3:12
Yeah, and so currently, we have the genius act going through Congress right now, what’s going what is that? What’s that? How’s that? Is that going to have an impact on the general Bitcoin, the stable coin? Well, explain the difference first?
Becky Reed 3:28
Okay, Bitcoin, yeah, no, that’s absolutely a great question. So cryptocurrency, crypto, in the front of that word, actually stands for cryptography. So cryptography is the underlying encryption methodology that is used to securitize transactions that happen on a blockchain or a distributed ledger network. So a DLT is just kind of a generic name for that technology. Blockchain is a type of DL three, okay, and blockchain is most notably connected to Bitcoin. So Bitcoin was created in around 2009 to really be a new form of self custodial money, meaning that it’s something that I own and that I can hold without the influence or requirement of a bank, a third party bank. Now, that’s not what it is today. Today, It’s really a commodity. It’s kind of used as a hedge for inflation, similar to gold or precious metals. Things of that nature and commodities are also things like, you know, corn and barley and, you know, butter and things like that, yeah, right, all of that stuff, right? So, so that part of it is kind of familiar, but it’s digitally native, right? It was created. It was born, and it lives in 100 percent digital environment that requires the Internet to access. So Bitcoin and other types of cryptocurrencies are pretty much the transaction process, how transactions happen on a blockchain or a distributed ledger. So think of it as kind of being the car on the highway right and a distributed ledger is just a database that stores information. All the blockchain is, is a bunch of transaction data that is stored in a block-like fashion, that’s really all it is. So the difference between something like Bitcoin, which most people are familiar with, and a stable coin, is that Bitcoin doesn’t make a lot of sense for a payment or any type of cryptocurrency that’s volatile. Because of that, you probably wouldn’t want to use your Tesla stock to pay for your coffee at Starbucks. Well, it’s the same exact kind of thing. The difference, of course, with a digital asset is the volatility is even greater than what you would see on the stock market most of the time. So using something like that is, is probably, you know, you, gold, you probably don’t want to walk in and pay for your coffee with gold. It just doesn’t make a lot of sense, right? That’s not why you bought it. That’s not why you’re using it. And you’re not wanting to use it as a payment mechanism, and because of the time it takes to settle and the volatility, you know, there’s no guarantee that it will be the same value at the end of the transaction that it was at the beginning. So cryptocurrency that’s volatile doesn’t make a lot of sense for payments. So enter stable coin. Stable coin are backed by a fiat currency we’re going to talk about today is backed by United States currency, or USD US dollars. And the Genius Act is a legislative bill that the Senate has passed that regulates what stable coins are, what they can do, who can issue them, how they can be used, who regulates them? All of that kind of framework, because that really doesn’t exist today, but in the Genius Act, it mentions a stable coin as a payment token. So it’s supposed to be used for payments, because it’s a representative, and it’s backed by one to one a US dollar, so it makes perfect sense to pay for your coffee with that, because to the end consumer, it feels just like spending money on their debit card.
Sarah Cooke 7:35
Right, right. And so what does it mean for digital currency and its proponents, in particular within the credit union movement?
Becky Reed 7:50
So financial institutions, credit unions included, what we really do every single day is move money on behalf of our members. That’s what we do. Now, you might say, well, but we do loans. Well, that’s moving money for giving the member a loan so that they can go give it that money to somebody else, right, to buy a car or whatever it is, a house, so buy now, pay later. Well, that’s moving money. That’s a loan, you know, debit card transactions. That’s moving money. Everything that we do is moving money, and so we need to pay attention to this as credit unions, because stable coins are a new payment rail, and the existing payment rails that we use today are siloed. They’re Frank, fragmented, they’re antiquated, they’re clunky and they’re expensive to run, from a back office perspective, and because I’ve worked in a financial institution, I know firsthand how painful it is to deal with payments. It’s expensive, it’s it’s just not a great experience. And everybody right now is experiencing astronomical fraud as it relates to payments. I mean, it is just off the charts. And so here we come with this new technology, this stable coin technology that has capabilities that are not available in traditional payment systems, that can help reduce fraud. And it’s a better it’s cheaper, it’s faster, it’s more secure, it’s all of those things, and globally, $4.1 million in stable coin transaction volume over the last 30 days. That is double the asset size of the entire ecosystem of credit unions here in the United States in one month. Now, you might say, who in the heck is using stable coins? Everybody else outside of America is using stable coins. So in here, here in the United States, people are like, Well, why is this such a big deal? Well, why would we even use a stable coin? Well, the people here in the United States trust the banks. Lot of other countries, they don’t. We have a US dollar that isn’t volatile, that’s not going all over the place that some dictator can come into office tomorrow and decide is worthless. So lots of other people in other countries, particularly developing countries, are using a US dollar back stable coin in order to hold their wealth and to keep a stable value in their money. And so this, this absolutely 100% is going to change everything.
Sarah Cooke 10:30
And are credit unions ready for that?
Becky Reed 10:34
No. No, they absolutely aren’t. I would say that probably 99% of credit unions in the United States are not connected to distributed ledger rails, and that’s something that needs to be on the priority list for planning for 2026. What is your plan to get connected to those rails? Now you don’t have to go from zero to 100. You can start small, but getting connected to those rails so your members can use stable coins for payments is going to be something that’s important. I don’t know if you saw the news yesterday, but guess what? Fiserv, they’re a payments company, right, Fiserv, starting a payment token, right, a stable coin rail that they’re going to start using. So don’t you think that Fiserv would want to make that stable coin rail available to credit unions? Yes, absolutely. So you need to be ready in your digital banking, in your members experience, their home banking experience, they need to be able to interact with the space. And what that problem means is you’re going to need to let them buy crypto, because at the end of the day, that’s what stable coin is. It’s a stable value cryptocurrency.
Sarah Cooke 11:54
Okay, and so what? What’s so difficult for credit union boards executives to get past with it?
Becky Reed 12:04
I would say that when I go out and I talk to boards, and we provide at BankSocial we provide free education to boards around stable coins, Faster Payments, really, we’re talking about an evolution in payments. So that includes things like RTP, FedNow, which, while those might be more traditional types of payment rails, it’s still something that is not going to go away in the next year. It will live in conjunction with the digital asset rails, and it will probably be interoperable. You know, things will move back and forth on different networks, similarly to how some things move today, not exactly, but, um, I what I don’t find is that these credit union boards are confused about what payments are. They know what they are, right? So when you when you talk about a digital token that’s backed by a US dollar, that’s traveling on a distributed ledger to at the end, from a consumer to a merchant, for example, everybody understands that. That’s not hard to understand. Where we sometimes get into murky waters is the whole cryptocurrency conversation, because it’s like, wait a minute, isn’t cryptocurrency? Isn’t that bad for the environment? Well, no, you’re talking about Bitcoin. That’s not what this is. So then they go, well, but it’s not safe. The bad guys use cryptocurrency all the time, yeah, but they also use cash, yeah. So once you can kind of get over some of those things, what I have found is everybody gets the payments. And I hear all the time they’re like, Oh, are you only talking to, you know, young boards or or boards that are really forward thinking and innovative? No, no. Everybody understands what we do as a financial institution. We just provide payment services to our members. So it hasn’t been, really, honestly, a tough hurdle to get over. Everyone gets it.
Sarah Cooke 14:06
Right. So what about implementing it? What sorts of things you said you can start small? What sorts of things can credit unions do to start small with stablecoin?
Becky Reed 14:16
Well, the first thing you need to do is you need to use it. So download a digital asset wallet. You can download ours, banksocial.io, you can go to the app store and see the bank, social app. We have a stable coin in there that you can buy. It’s called RUSD. You don’t have to use ours, but, you know, you can go to Coinbase you can buy USDC, you know, download a digital asset wallet and buy some cryptocurrency. You don’t have to spend a lot of money, $5 $10 I mean, it doesn’t cost that much to do it, but start using it. And then Sarah, I’m going to send some to you, and you’re going to send it back to me. Once you start using it, then it’s the the mysticism is out of the equation, right? You’re like, Oh, this feels a lot like a P to P transaction, but it’s way, way, way better and way faster. I can tell you that my eyes were open the first time I received money in my digital wallet, I was like, Wait, it’s eight o’clock at night on a Friday, and I just got money from you. Whoa, this is like blowing my mind. And so use it. Start using it. That’s it. Just start using it. That doesn’t require an investment from the credit union at all. Just start using it. Because if you’re trying to implement something you never use Well, that’s just silly, so start using it. Then in your planning sessions this year, starting to going into, going into your planning sessions, craft a plan for getting your members on chain. They need to be able to have access to cryptocurrency rails that they can buy, sell, send and receive crypto, including stable coins, or maybe just stable coins. So go out there, vet different vendors. There are CUSOs that are doing this. Certainly, BankSocial is one of those, but there are others, and the Genius Act actually allows CUSOs to be a stable coin issuer.
Sarah Cooke 16:20
Mm, hmm. So go ahead.
Becky Reed 16:23
Go ahead.
Sarah Cooke 16:24
One of the things you talked about being a stable coin issuer and Fiserv starting their own chain, like anybody can kind of just start up a cryptocurrency?
Becky Reed 16:37
No.
Sarah Cooke 16:37
No, okay.
Becky Reed 16:39
The genius the genius Act provides the framework by which you can become a stable coin issue. So if you think about it, similar to other types of entities that process money or do something here in the United States that has to do with lending or anything financial, you know, you’re going to have to register, you’re going to have to be licensed, you’re going to have to be regulated. So a lot of the stable coin, the Genius Act, actually, is about that, what the regulatory framework is, what the auditing is, what kinds of things can back a stable coin, and pretty much it’s a US dollar sitting in a bank account, or it is a US Treasury. Those two things are pretty much the only things it talks about. The auditing that has to take place to verify that the funds that are backing the token are actually there. So all of that stuff is there. But no, it, it is not just anybody you know tomorrow can just, you know, it’s it’s different than like when the internet first came out, right? Everybody could, anybody who wanted to have a website could have a website. That’s not the case here.
Sarah Cooke 17:46
Right. Okay. And so how is it different from Zelle, or something, some other immediate payment system?
Becky Reed 17:54
Well, Zell uses mostly the Fed now, or the RTP rails, and sometimes they’ll use ACH but, but Zell is using traditional payment rails. And Zelle was formed by a consortium of banks who created kind of their own little network. And how it started to begin with was only people who were in that bank network could could do p to p payments. So it was a very closed system, and if you didn’t belong to that, then you couldn’t participate in Zelle. Now it’s expanded since then, and there’s been partners that credit unions can work with to have access to that Zelle network. But Zelle is using traditional payment rails, and so they’re not taking advantage of the fraud and risk mitigation functionality of a blockchain or a distributed ledger, so they’re using traditional payment rails.
Sarah Cooke 18:52
Can you go a little deeper into the the fraud part? That’s what I was going to talk about next, or ask about next.
Becky Reed 18:57
Yeah. So because distributed ledgers are digitally native, and the tokens that ride on a distributed ledger are programmable. And so when you think about that, there is a type of program that you can use for a transaction token. Right now, that transaction token can be a payment token, like a stable coin. It could be a Bitcoin type of thing, although you can’t do smart contracts with Bitcoin, but it could be, you know, Ethereum or h bar or XRP, and so those kinds of things can have programs that are written within them that can do all sorts of things. So it can, for example, hold a KYC. So now I can put wrap a smart contract around, let’s say $5,000 and I can say only the person who matches this KYC can ever transact this money. Well, you can’t do that with regular money today, so that makes that transaction a lot more secure. Or you can say, you know, only this is going to you, Sarah, only you can ever do anything with it. So only Sarah, who has KYC and proven that it is Sarah can ever do a transaction or even receive that. So that’s one thing that can also happen. Also…
Sarah Cooke 20:28
…thinking, know your customer right?
Becky Reed 20:30
Right. Yes, it’s the Bank Secrecy Act, customer information protection that you have to do, CIP customer information, yeah, program, CIP is customer information program, sorry, and then know your customer is KYC. So, so that’s required by US laws, right, that you have to know who you’re doing business with for anti money laundering, you know, capabilities. So, so all of that can can happen on in a smart contract, in a digitally native token. Also, something that amazed me was every transaction on chain is transparent. If you have the information where, if you know where to look, if you basically have the wallet address or the transaction ID, ID, you can go in and you can look at a transaction. You can also see forwards and backwards, wherever a certain token has gone, as long as you have the information in order to be able to trace it. So we at BankSocial use a tool called chain analysis, and we can actually scan a wallet, and we can see what has interacted with that wallet forward and backward to infinity. So now let’s take that Zelle transaction that we just talked about, where I’m sending you money. Mm, hmm. I put in your email address or whatever, and that money goes into your bank account, but in some kind of real time payment way, usually, okay. The when I do that, when I enter your information to send you the money to, the Zelle or the financial institution or you has zero visibility into is that a scammer, right? Is that a bad place? Is that person doing bad things? Well…
Sarah Cooke 22:26
…my handle last week and screwed something up. Yeah.
Becky Reed 22:29
Right. So I mean, you don’t, I mean you don’t know. You have no idea, and the bank doesn’t know either. Zelle doesn’t know. Well, on a distributed ledger, we do know. So before you even send that money, we can scan that wallet and we can go, that wallet was just open like five seconds ago. It’s brand spanking new. It’s never had any transaction in it. It, were you aware of that? Are you still good with sending this transaction, or is that outside of what you expected? And so we can prompt the member in digital banking, right, and during that payment process to just go, Hey, you might want to just stop for just a minute and take it and just think about this transaction that’s not we can’t do that today. We can also stop the transaction. Oh, it’s going to OFAC sanction wallet. Nope, not sending, it not happening. And so that kind of capability, and using AI to monitor these things in real time, and, you know, consume loads and loads of transaction information to try to see is this transaction outside of what the member would normally do. All that capability is available on a distributed ledger that is 100% not available today in traditional payment systems.
Sarah Cooke 23:49
And it seems, I mean just the cost in the decrease of fraud, hopefully that would be expected alone would be worthwhile investing.
Becky Reed 23:57
My gosh, yeah, and and, and, to be honest, we ain’t seen nothing yet. I mean, the capability that we have, there’s a lot of tools that just aren’t built yet, because this is just so new. But I mean, even in three years from now, it’s going to be probably 1000 times more robust than it even is today, because people will be building tools on chain as people start using it more for things outside of what I would consider gambling money, right? Which is what a lot of people do with cryptocurrency today. They buy something hoping to make a bunch of money, right? When they sell it, very speculative kind of thing. I wouldn’t even call it investing personally. It’s gambling, right? That, you know, you roll the dice and it’s going to go down or go up, and you know, maybe you make money or maybe you don’t, but when we’re talking about stable coins and payment tokens and things like that, you know that’s a completely different environment. And there will 100% there already are folks that will be building tools for financial institutions to make that, that fraud and risk mitigation more robust.
Sarah Cooke 23:57
And so what happens when you send, you’re sending me money on the on on the chain, and just remind me of on the fine…
Becky Reed 25:05
On chain. It’s called on chain, take the, yeah.
Sarah Cooke 25:05
And so how do I get it? Like you’re sending it to me and you know you’re sending it to me, but how do I get it?
Becky Reed 25:05
Alright, so the way that it works is I say, Hey Sarah, and I owe you five bucks for the pizza that we had last night, right? And I’m going to send you some stable coin, some Rivia stable coin, right? You go, Great, I’ll take your Rivia, and so we both open up our digital asset Wallet app. It’s an app, and I say, Send $5 in Rivia, and you say, receive Rivia, and it gives a QR code. Okay, there’s a QR code for your wallet, I scan your QR code, $5 is now in your wallet.
Sarah Cooke 26:07
Cool, very simple.
Becky Reed 26:08
Very simple. That’s why I’m saying people, you need to use it, right? Use it because then it makes perfect sense. You’re like, oh, okay, that’s how it works. Now, in a merchant transaction, exactly the same thing. Walk up at a point of sale, similar to tap to pay you scan the QR code, bam. You just paid for your coffee.
Sarah Cooke 26:31
So what’s next? What’s next for credit unions and stablecoin?
Becky Reed 26:37
Well, we’re going to see, I think, a huge increase in different stable coin issuers, different stable coin providers. They’re, they’re going to be popping up all over the place. We’re already seeing it right with Fiserv. I think that probably the Visa and MasterCard networks will be coming out with something I think JP Morgan has already done some things around a stable coin, because everybody wants to try to own the space, because you can make money with issuing a stable coin, similar to you make money the way you make money as Visa, MasterCard, right? Similar to interchange, there are transaction fees now. They are much, much less, in general, than what you experience with traditional rails today for the most part, but I would say they’re more akin to an ACH cost. So I think an ACH cost a credit union a penny or something. You know, real time, payment costs about four cents. It’s it’s less than that. Sometimes it’s sub pennies for each transaction, but you can with volume, you can make money doing that, and then you can make money with the US Treasuries and the dollars that are backing it, as long as it’s a permissible, you know, thing that you’re able to do while holding it, you can’t go invest it in Tesla stock, for example, the stable coin issuer can’t do that. So, um, so for for credit unions, uh, in what’s next is, again, you need to get ready for it, and you need to understand enough about it to understand what is the noise and what’s not. So there’s going to be, like, probably 1000 different stable coins, and behind the scenes, they’re all going to be moving back and forth between each other. So the JP Morgan is going to go to the Fiserv stable coin, that’s going to go to the credit union stable coin, and then it’s going to end up at the member now, it all happens simultaneously. A bunch of ledger moves in the in the back, but I think what we’re going to see is explosion, and then we’ll see consolidation. The winners. The winners will will come out, and they’ll be, you know, there’ll be four or five maybe more, but I do not believe there’s going to be one.
Sarah Cooke 28:46
So you’re talking about the stable coin itself is consolidation of that not, not credit unions?
Becky Reed 28:52
Not credit unions. Right. I’m talking about what credit unions can expect is there’s going to be 5000 different stable coin options, and so they’re going to need to figure out how they’re going to deal with that when their members, you know what their members are going to use. And now my suggestion is, in my opinion, don’t know how everything is going to play out in the future, but credit unions will probably have, this is just my opinion. Again, maybe they’ll have two or three CUSOs that issue, stable coins that credit unions use kind of like Zelle, right? It’s their network. It’s the credit union network, and they all agree that they’re going to allow their members to they’re going to accept those for other credit union members. Okay, however, what if their member wants to send money to Chase. Does that mean they can’t? No, or what if their member wants to accept money from Chase? Does that mean they can’t? No, so you just have to make sure that the provider that you’re utilizing to provide the stable coins that your members are using to spend has interoperability.
Sarah Cooke 29:53
That’s what I was going to Yeah, that was the next question for sure. Because if there’s 5000 hopefully they work together a little a little bit.
Becky Reed 30:00
Right. So, but that’s where I think that consolidation is going to happen. 5000 won’t survive, but I think everybody will try to hurry up and get into the race at the beginning, and then it’ll consolidate down to, you know, a dozen, or, I don’t know, however many,
Sarah Cooke 30:15
Yeah, alrighty. So Well, this has been a lot. Thank you for your expertise. I appreciate it. I’m going to give you the final word. What would you like to leave our credit union audience with?
Becky Reed 30:27
Credit unions, please, please. Our natural state is to wait. And I’m telling you, you don’t need to implement something in the next year, but by two years, you better have a plan. So your members are going to be demanding this. They’re already buying cryptocurrency, that gambling thing we talked about, I promise you, your members are already doing. Look at your data. Look at how much is going out to digital asset exchanges. It’s leaving. It’s also going out to Venmo and Cash App and Zelle and all of these other things, and it’s not coming back. And so, have a payment strategy that includes digital assets. Please, please, and do it in 2026 I beg you.
Sarah Cooke 31:15
Thank you so much. Really appreciate it. Enjoy your weekend. Becky.
Becky Reed 31:21
Thank you. You too. Sarah.