Custodia CEO slams Fed policy for giving big banks preferential treatment in stablecoins
The post Custodia CEO slams Fed policy for giving big banks preferential treatment in stablecoins appeared on BitcoinEthereumNews.com. Custodia Bank CEO Caitlin Long accused the US Federal Reserve of quietly maintaining anti-crypto policies that favor large banks while presenting an appearance of regulatory easing. Long criticized the Fed for rescinding several restrictive crypto policies last week while keeping in place a key rule from January 2023 that blocks banks from directly engaging with crypto. She warned that the move would create an unfair advantage for major banks seeking to issue private stablecoins while stifling innovation on private networks. Fed’s crypto policy In a detailed post on social media, Long argued that although the Fed rolled back four pieces of guidance, it deliberately kept a critical policy intact. The policy prohibits banks from holding cryptocurrencies for their own accounts, even to cover small blockchain transaction fees. It also bars banks from issuing stablecoins on public blockchains like Ethereum (ETH), instead favoring permissioned, private networks typically operated by large financial institutions. Long said: “The Fed definitely won on PR spin.” She added that the central bank’s April 24 announcement listed every piece of guidance it rescinded but made no mention of the rule it left untouched. She further explained that the remaining policy severely limits banks’ ability to offer crypto custody services. Under current rules, banks are unable to pay fluctuating gas fees out of pocket when processing on-chain transactions, a technical barrier that undermines their ability to serve digital asset clients efficiently. Private blockchains and regulatory control Long’s criticism comes amid growing concerns that the Fed is promoting private blockchain solutions controlled by major banks, while slowing the adoption of decentralized, public blockchain networks. She warned that this strategy could entrench big-bank dominance over emerging stablecoin markets, giving them a head start while other institutions await new federal stablecoin legislation. Meanwhile, Senator Cynthia Lummis recently echoed Long’s concerns and criticized…
The post Custodia CEO slams Fed policy for giving big banks preferential treatment in stablecoins appeared on BitcoinEthereumNews.com.
Custodia Bank CEO Caitlin Long accused the US Federal Reserve of quietly maintaining anti-crypto policies that favor large banks while presenting an appearance of regulatory easing. Long criticized the Fed for rescinding several restrictive crypto policies last week while keeping in place a key rule from January 2023 that blocks banks from directly engaging with crypto. She warned that the move would create an unfair advantage for major banks seeking to issue private stablecoins while stifling innovation on private networks. Fed’s crypto policy In a detailed post on social media, Long argued that although the Fed rolled back four pieces of guidance, it deliberately kept a critical policy intact. The policy prohibits banks from holding cryptocurrencies for their own accounts, even to cover small blockchain transaction fees. It also bars banks from issuing stablecoins on public blockchains like Ethereum (ETH), instead favoring permissioned, private networks typically operated by large financial institutions. Long said: “The Fed definitely won on PR spin.” She added that the central bank’s April 24 announcement listed every piece of guidance it rescinded but made no mention of the rule it left untouched. She further explained that the remaining policy severely limits banks’ ability to offer crypto custody services. Under current rules, banks are unable to pay fluctuating gas fees out of pocket when processing on-chain transactions, a technical barrier that undermines their ability to serve digital asset clients efficiently. Private blockchains and regulatory control Long’s criticism comes amid growing concerns that the Fed is promoting private blockchain solutions controlled by major banks, while slowing the adoption of decentralized, public blockchain networks. She warned that this strategy could entrench big-bank dominance over emerging stablecoin markets, giving them a head start while other institutions await new federal stablecoin legislation. Meanwhile, Senator Cynthia Lummis recently echoed Long’s concerns and criticized…
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