The US administration has accomplished “nothing” to tackle crypto debanking challenges since US President Donald Trump returned to the Oval Office, according to Custodia Bank’s CEO Caitlin Long.
While addressing the audience at ETHDenver on Feb. 28, Long stated that although the “perception is that there has been a relaxation, none of the federal banking authorities have actually rescinded any of the anti-crypto directives.”
“It is still assumed to be unsafe and unsound for a bank to engage with a digital asset, even in a minimal amount,” Long emphasized, arguing that “nothing” has shifted.
“That is bound to change, no doubt about it, but Trump hasn’t put forth [anything] yet.”
Caitlin Long speaking at ETHDenver in Denver, Colorado on Feb. 28. Source: ETHDenver
The leader of the crypto-friendly bank remarked that the White House must appoint a new chair to guide the Federal Deposit Insurance Corporation, which, according to Long, has generally resisted adapting to technological advancements for nearly 15 years under Martin Gruenberg’s oversight.
“This is the reason why the banking system is so outdated in this nation, as we’ve had someone uninterested in any modifications for the past 15 years.”
Gruenberg, who was succeeded by Acting Chair Travis Hill on Jan. 20, faced accusations of being one of the primary architects of “Operation Chokepoint 2.0” — a supposed federal initiative to debank crypto enterprises.
Long recognized that the Securities and Exchange Commission has executed a “massive turnaround” on its crypto approach — and is anticipating a similar transformation in banking regulations.
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One day after the inauguration of US President Donald Trump on Jan. 20, the SEC initiated a Crypto Task Force led by SEC commissioner Hester Peirce to advocate for this novel strategy.
The SEC notably revoked a contentious rule, Staff Accounting Bulletin 121, which mandated that financial institutions holding crypto must classify them as liabilities on their balance sheets.
Long also aspires for the US to enact long-awaited stablecoin regulations soon but insists on implementing stronger consumer safeguards — primarily ensuring that banks maintain cash reserves.
“The typical bank in the United States currently keeps 8 cents in cash against every $1 of demand deposits… That is inherently unstable and particularly vulnerable to a bank run.”
“In the crypto sector, I think we’ve realized that this business model is unviable,” Long remarked, referring to the Silvergate Bank demise.
To effectively safeguard consumers, stablecoin issuers must be mandated to hold cash to back the stablecoin obligation, Long asserted.
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