Will Crypto’s Fall Stall the Future of Self-Sovereign Identity?

handing holding up digital identity ID card
Al Pascual Photo
Senior Principal & Enterprise Solutions Lead

4 minutes

Decentralized control of members’ digital identities may not impact U.S. credit unions tomorrow, but it’s coming.

When cryptocurrency peaked in 2021, it was the future of money. Celebrities promoted crypto exchanges in high-profile ad campaigns and crypto chatter was inescapable. The frenzy bled into mainstream finance and raised the profile of self-sovereign identity, the form of decentralized identity authentication used in crypto transactions, as the coming paradigm.

A year and change later, the two largest cryptocurrencies have lost three-quarters of their value, as 2022 ended on a brutal note with the collapse of a formerly top crypto exchange.

Should waning crypto enthusiasm change how credit unions think about the need for self-sovereign identity? Even without a crypto springboard, the future of SSID looks promising, if not inevitable. Let’s look at this emerging concept and where it’s headed.

Why the Future Is Still Headed Toward Self-Sovereign Identity

For those who aren’t deeply familiar with the idea of SSID, at the core of its promise is putting each person in control of their digital identity. It inverts the current model of centralized identity authentication—i.e., signing in with credentials stored by another entity—into one that’s decentralized. In a decentralized model, each person possesses and stores their own identity credentials in a digital wallet that is cryptographically secured. Each user directly controls what information is shared and who it is shared with.

The obvious problem with current centralized methods is that personal information is no longer under personal control. Nearly every organization now collects and stores an unprecedented amount of data, which can be subject to data breaches and security lapses. The resulting identity theft is a common occurrence; more than 22 million Americans had personal information exposed in high-risk data breaches during the fourth quarter of 2022 alone. Amidst the fraud created by social engineering, imposter scams and sophisticated deepfakes, the digital trust deficit has deepened.

Pioneers in the SSID space believe that the ownership and administration of one’s identity is a right, and evidence is mounting that the public feels this way too. A 2020 KPMG survey found that the majority (87%) of Americans see data privacy as a human right, and calls for national data privacy standards are growing according to an AP-NORC poll. The winds of change are ushering in a more privacy-centric digital future. Credit unions, along with all U.S. financial institutions, will ultimately need to heed the call for authentication methods that put members in greater control of their information.

How Should Credit Unions Approach Self-Sovereign Identity Today?

At this point in time, wider SSID adoption is still several years out. But we don’t need to look too far to see how it might work in the financial services industry. During the last several years, some of Canada’s largest banks adopted a blockchain-based digital identity solution to verify customers for online banking services while reducing the privacy risks posed by breaches and impersonation. (Read more about digital ID in Canada.)

Though it hasn’t yet gained the same traction in the U.S., when considered in the context of potential new data privacy regulations and the introduction of digital drivers’ licenses, there is a clear opportunity that could potentially accelerate the adoption timeline.

Most likely, it will be the largest financial institutions and fintechs that establish the business case here in the U.S. When that happens, it will be a call to action for credit unions that want to meet member demand, remain competitive and demonstrate tech leadership. 

Credit unions must think about how their technology investments will age in a new digital identity future. How long will a solution add value to your stack, and at what cost, before its likely to become redundant? Though it’s probably too early to make anticipatory SSID changes now, you can at least avoid investments that won’t allow for an easy or smooth pivot when the time comes.

Now is a great time to begin SSID education. Systemic change takes time, but as we’ve seen in the past, such change moves slowly until it happens all at once. With a strategic awareness of where the data and privacy winds are blowing, credit unions will be poised to deliver modern identity verification solutions at the right time.   

Al Pascual is a senior principal and enterprise solutions lead at TransUnion. Learn more at

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