- Custodia Bank CEO Caitlin Long raised concerns about the FED favoring established players.
- The favoritism is hurting crypto startups, even frontrunners in the crypto space.
- Custodia Bank has been actively seeking admission as a Federal Reserve member.
Caitlin Long, the founder and CEO of Custodia Bank, has raised concerns about the U.S. Federal Reserve and regulators allegedly favoring established players in the cryptocurrency industry while impeding startups. In a recent interview, Long, who was part of the Wyoming Blockchain Select Committee, suggested that there is a “coordinated crackdown” on cryptocurrency banking service providers, with the involvement of the White House.
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She pointed out the interesting coincidence that following regulatory actions against prominent industry players, major incumbents such as Charles Schwab, Citadel Securities, and Fidelity Digital Assets announced the launch of EDX, a cryptocurrency exchange.
According to Long, this indicates that state financial institutions, including the Federal Reserve, are selectively granting access to their services, giving preference to larger incumbents. She emphasized that startups that comply with all federal laws and regulations are being kept out, while established players are allowed to proceed.
Long’s own company, Custodia Bank, has been actively seeking admission as a Federal Reserve member and access to a Federal Reserve Master Account. However, their application was rejected due to concerns about the safety and soundness risks associated with their proposed focus on crypto-assets.
Long has been critical of the treatment of cryptocurrencies by the US government in the past, and this recent situation has further highlighted her concerns about regulatory bias and its potential impact on the growth and development of innovative startups in the crypto industry.
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