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Despite the Trump administration being more crypto-friendly than its predecessor, it still hasn’t addressed the issue of crypto debanking, Custodia Bank CEO Caitlin Long said.
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The US government has done “nothing” to address crypto debanking issues since US President Donald Trump returned to the White House, according to Custodia Bank’s CEO Caitlin Long.
Speaking on stage at ETHDenver on Feb. 28, Long said while the “perception is that there has been a loosening, none of the federal banking agencies have actually overturned any of the anti-crypto guidance.”
“It is still presumed unsafe and unsound for a bank to touch a digital asset even in a de minimis amount,” Long said while arguing that “nothing” has changed.
“That is going to change, no doubt, but Trump hasn’t proposed [anything] yet.”
Caitlin Long speaking at ETHDenver in Denver, Colorado on Feb. 28. Source: ETHDenver
The CEO of the crypto-friendly bank said the White House needs to appoint a new chair to lead the Federal Deposit Insurance Corporation, which Long said has largely opposed evolving with technological change for the best part of 15 years under Martin Gruenberg’s leadership.
“This is why the banking system is so backwards in this country, because for the last 15 years, we’ve had somebody who isn’t interested in any change.”
Gruenberg, who was replaced by Acting Chair Travis Hill on Jan. 20, had been accused of being one of the key orchestrators of “Operation Chokepoint 2.0” — a purported federal effort to debank crypto companies.
Long acknowledged that the Securities and Exchange Commission has done a “massive 180” on its crypto policy — and is waiting for a similar shift in banking regulation.
Related: Changing political landscape brings huge crypto opportunity — US Rep. Steil
One day after US President Donald Trump was inaugurated on Jan. 20, the SEC established a Crypto Task Force led by SEC commissioner Hester Peirce to support this new approach.
The SEC notably canceled a controversial rule, Staff Accounting Bulletin 121, that asked financial firms holding crypto to record them as liabilities on their balance sheets.
Long also hopes the US passes long-awaited stablecoin legislation soon but wants to see stronger consumer protections set in place — most notably, making sure the banks hold on to cash.
“The average bank in the United States right now holds 8 cents in cash against every $1 of demand deposits… That’s fundamentally unstable and fundamentally susceptible to a bank run.”
“And in the crypto industry, I think we’ve learned that that business model does not work,” Long, said, citing the Silvergate Bank collapse.
To adequately protect consumers, stablecoin issuers must be forced to hold cash to back the stablecoin liability, Long said.
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This article first appeared at Cointelegraph.com News
