Custodia CEO Criticizes Fed's Tough Stance on Crypto Companies

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  • Custodia CEO Caitlin Long has criticized the Federal Reserve’s stance on cryptocurrency companies.
  • She highlighted the case of the Bank of New York Mellon being granted permission to hold digital assets in custody.
  • Custodia Bank is launching institutional Bitcoin custody services.

Custodia’s CEO, Caitlin Long, has expressed her concerns about the Federal Reserve’s actions towards cryptocurrency companies in a recent podcast interview on Thinking Crypto. She believes that the Fed’s treatment of crypto and fintech firms seeking regulation has been unfair, showing a bias towards traditional financial institutions.

Long highlighted a specific case where the Bank of New York Mellon was granted permission to hold digital assets in custody, while Custodia Bank’s application for the same was denied. Both banks had similar business plans, which makes the differing outcomes puzzling. She also revealed that the Fed pressured the New York Department of Financial Services to reject PayPal’s new stablecoin, even though the state regulator had initially been in favor.

Long argues that the Fed’s strict approach has discouraged crypto companies from pursuing regulation, pushing them into unregulated spaces. She mentioned that the Fed initially encouraged Custodia’s application process with positive feedback, only to ultimately reject it with strong criticism.

In her view, the Federal Reserve should adopt a more supportive stance toward crypto regulation. Long suggests that the Fed should establish clear requirements for companies to meet while allowing those that comply to operate. She pointed out the successful example of Wyoming’s Special Purpose Depository Institution rules as a model for effective crypto oversight.

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Despite facing challenges due to the Fed’s actions, Long mentioned that Custodia Bank is on the verge of launching institutional Bitcoin custody services. These services will include unique features that are not currently offered in the market.

Long hinted at an innovative design that aligns with Bitcoin’s principle of self-custody while also incorporating Custodia’s banking safeguards. The goal is to cater to long-term investors rather than those looking for short-term speculative gains.