- Caitlin Long, Custodia Bank’s CEO, criticizes the Federal Reserve’s unequal treatment of crypto firms seeking regulation.
- Long reveals the Fed’s apparent role in discouraging crypto firms.
- Despite regulatory hurdles, Custodia Bank is on the brink of launching unique institutional Bitcoin custody services.
In one of her recent podcast appearances on Thinking Crypto, Caitlin Long, CEO of Custodia Bank, criticizes the FED over its stance on cryptocurrencies and fintech companies trying to operate in a regulated space. According to Long, the Fed has shown clear “incumbency bias” in its differential treatment of traditional financial institutions versus new crypto-focused entities.
Long cited the example of Bank of New York Mellon receiving approval to custody digital assets shortly after Custodia’s application was denied, despite both submitting essentially identical business plans. She also revealed the Fed pressured the New York Department of Financial Services not to approve PayPal’s new stablecoin, overriding the state regulator.
Long argues the Fed’s harsh actions have discouraged crypto companies from seeking regulation, driving activity into unregulated channels. She stated the Fed induced Custodia into a lengthy application process through positive feedback, only to issue a highly critical denial.
The CEO believes the Fed should take an “enabling” approach to crypto regulation, laying out requirements for firms to meet while allowing compliant entities to operate. She pointed to Wyoming’s Special Purpose Depository Institution rules as a model for crypto oversight done right.
Despite setbacks with the Fed, Long said Custodia Bank is close to launching institutional Bitcoin custody services with features not currently available in the market.
Long hinted at a design that respects Bitcoin‘s ethos of self-custody while still utilizing Custodia’s bank protections. The company aims to serve long-term investors rather than short-term speculators.
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