- Custodia Bank CEO Caitlin Long revealed that federal banking agencies have not overturned any anti-crypto guidance despite Trump’s return to office.
- Evidence of regulatory hostility includes “Pause Letters” directing FDIC-supervised banks to cease crypto activities and the Federal Reserve’s denial of Custodia’s master account application.
- Long advocates for stablecoin legislation and consumer protection requiring banks to maintain adequate cash reserves against deposits.
- The crypto industry is optimistic about potential policy shifts under Trump, especially after the SEC formed a Crypto Task Force under pro-crypto commissioner Hester Peirce.
Donald Trump’s return to the White House has raised hopes for a more crypto friendly environment in the United States. And while there are several positive developments, Custodia Bank CEO Caitlin Long said when it comes to crypto debanking issues, “nothing” has been done yet.
Related: US Bitcoin ETFs Surpass Record 7-Day Outflow Streak as Billions Leave Funds
During ETHDenver on February 28, Long lamented that “none of the federal banking agencies have actually overturned any of the anti-crypto guidance”.
Long explained that as an “over reaction to FTX” the Biden administration dramatically changed their stance on crypto. This led to the US Federal Reserve denying Custodia access to a master account.
The Fed regulates banks in the US and cited concerns around Custodia’s involvement in “crypto-asset-related activities”.
The Custodia CEO said that although she expects this to change, she believes that it “is still presumed unsafe and unsound for a bank to touch a digital asset even in a de minimis amount”.
Debanking is a hot topic in the crypto industry, with some claiming that regulators wanted to essentially bring the industry to its knees.
Marc Andreessen, Co-founder of Andreessen Horowitz said that several crypto founders had been debanked during Biden’s term and called it “operation choke point 2.0”.
He claimed that efforts were “primarily against […] political enemies and disfavored tech startups”.
Pause Letters Show Choke Point 2.0 No Conspiracy Theory, Says Coinbase Legal Chief
While some have dismissed this as a conspiracy theory, Coinbase Chief Legal Officer Paul Grewal pointed to 23 so-called “Pause Letters”, where FDIC-supervised banks were asked to cease all activities related to crypto.
The letters show that this was no conspiracy theory at all, that this was not just rank speculation or the musings of a paranoid industry.
Paul Grewal, Coinbase Chief Legal OfficerAlthough under Trump the US Securities and Exchange Commission (SEC) has formed a Crypto Task Force led by pro-crypto SEC commissioner Hester Peirce, Long argues such a policy shift is still overdue for the banking sector.
Related: SEC Lets Gemini, Consensys Off the Hook, in Latest Crypto Regulation Easing Effort
She argued that consumer protection and stablecoin legislation should be top priorities. Specifically, she emphasised that banks must maintain sufficient cash reserves.
The average bank in the United States right now holds 8 cents in cash against every $1 of demand deposits.
Caitlin Long, Custodia Bank CEOAccording to Long, this is “fundamentally unstable and […] susceptible to a bank run”, adding that the crypto sector has “learned that that business model does not work”.
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