NEW YORK (AP) — Credit unions have been dipping their toes into cryptocurrency over the past year. The timing largely coincided with the “crypto winter” that saw digital coins plunge in value and numerous exchanges and lenders collapse.

But at the height of the crypto craze in late 2021, many credit unions saw their members buying cryptocurrency in significant numbers. In December 2021, the National Credit Union Administration, the federal agency that regulates credit unions, released guidance clarifying that federally insured credit unions can partner with third-party providers to allow their members to buy, sell and hold cryptocurrencies.

Lone Star Credit Union, a small Dallas credit union with $163 million in assets, refers members interested in buying cryptocurrency to BankSocial, a non-custodial wallet provider, which gives buyers control over access to their assets.

In an interview with The Associated Press, Lone Star Credit Union CEO Becky Reed discusses the partnership and why she is optimistic about crypto’s future.

Q: What was behind Lone Star’s decision to enter the crypto market?

A: It was in late 2021 and early 2022 that we noticed that our members were buying crypto. At that point in time, we really thought that our members weren’t. If you asked our executive team and our board they would say, ‘Well, our members don’t care about cryptocurrencies.’ Well, the data showed otherwise.

Q: What did the data show?

A: There is a popular notion that wealthy people are buying a bunch of crypto and holding it and selling it and making a lot of money. But the truth is what we saw was people buying it similar to what they would buy with stocks like on E-Trade or something. Every time they got a paycheck, they would buy $100.

Q: Has that trend changed with the downturn of cryptocurrencies?

A: Now it has dramatically decreased. Now it’s like the die-hard people. Maybe 10% of the people who were buying it are still buying it. So we’ve seen it greatly reduced in both volume and how often.

Q: So where do you see cryptocurrency going?

A: A lot of the hype that was happening in the early part of 2022 in particular, caused a lot of fear of missing out, FOMO. And so I think that people potentially got into the space because of that without really understanding what it is that they were getting into. And I think that there certainly was a misunderstanding of custodianship. You know, who actually owns the crypto in your wallet … But now that some of the negative things have happened in this space, a lot of that fear of missing out went away. And now the real use cases and the real builders in this space kind of have a runway to do things in a regulated and compliant way. I believe that distributed ledger technology, which includes cryptocurrency but is not limited to cryptocurrency, is the future of finance.

Q: What was the advantage of partnering with a non-custodial wallet provider?

A: When you really look at the reason crypto was created, it was created for self-custody …. Our members were buying it anyway and in some cases were buying it from unscrupulous exchanges that were some place that wasn’t very regulated, highly regulated. So, BankSocial follows the regulations here in the United States. It’s self-custody. Self-custody was something that was important and we figured, well, let’s refer it.

Q: Does Lone Star offer any kind of financial advice about crypto?

A: In no way are we recommending that people go out and buy crypto. If you choose to do that, we recommend BankSocial, but it’s really around, you know, this is not an investment product, it’s not insured, and it has a high amount of volatility and risk. And we at Lone Star are not giving you any advice as to what you should buy.

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