Susan Sink, St. Joseph
Central Minnesota Credit Union, a banking institution I love because I believe in the community aspect of credit unions and because ours has provided such great and reliable service over the years is, I believe, moving in a dangerous direction. That direction is Bitcoin.
On March 1, CMCU rebranded as Magnifi Financial. Right away the word “financial” in their name made me nervous. Were they moving away from a banking identity toward a “wealth management” identity? A month later, they announced the first major new service: bitcoin. They are contributing to a dangerous trend that blurs the line between currency and something that is definitely not currency: bitcoin.
Bitcoin is a risky investment. It is not a currency like pesos or euros. There is no government backing it or regulating its value. Any dollars you have in one of the local banks is FDIC insured. It is backed by the U.S. Treasury. Dollars you have in Magnifi Financial savings or checking accounts are backed by the NCUA, the National Credit Union Association. That money will be there. Bitcoin is not the same.
Bitcoin is a good target for fraudsters. Mostly because people don’t understand what it is. Because bitcoin’s value rises and falls based only on supply and demand, its value can be manipulated by the super-rich who own most of it. Because people don’t understand it, it can be faked. The company Magnifi Financial is working with to provide this service is NYDIG.
NYDIG is a digital platform. What they provide is a seamless way to buy/sell/manage bitcoin within your normal online banking website. More like e-trade than a bank. When you open your online banking account at Magnifi Financial, you will see your savings account, checking account, maybe a car or mortgage loan account, and also, if you register for this optional service, your bitcoin account. You can transfer money into and out of it. You can have part of your payroll check deposited into it. This is what I am opposed to. Magnifi Financial is encouraging the very dangerous practice of seeing bitcoin as equivalent to U.S. dollars. You can get your interest in bitcoin instead of U.S. dollars. NYDIG encourages companies to use their platforms to pay their employees and offer bonuses and incentives in bitcoin.
These bitcoin services are in the wrong place on the bank’s website. They should be over in the brokerage. If you look at Magnifi Financial’s home page, there are three tabs: personal, business and wealth. The wealth page directs you to their financial advisors, who can advise you in all aspects of investing, including the risky investment into bitcoin. That is where NYDIG should connect their platform. Instead, they are normalizing the idea that bitcoin is money. And a lot of people stand to lose a lot of actual money purchasing it.