Fed Policy Gives Big Banks a Crypto Edge, Warns CEO of Custodia Bank
The post Fed Policy Gives Big Banks a Crypto Edge, Warns CEO of Custodia Bank appeared on BitcoinEthereumNews.com. Regulations Caitlin Long, the founder and CEO of Custodia Bank, recently shared sharp observations about the Federal Reserve’s stance on cryptocurrency regulation. In a detailed thread, Long explains how the Fed’s selective enforcement of anti-crypto policies is not only delaying innovation but also giving a major head start to big banks launching permissioned stablecoins. A Lone Anti-Crypto Rule Left Standing On January 27, 2023, the Biden administration coordinated with the Federal Reserve to release several statements targeting crypto. Since then, four of the five issued regulations have been rescinded—except one. The surviving guidance, Long notes, reveals the Fed’s consistent anti-crypto stance: it blocks banks from: Touching cryptoassets as principal, even in small amounts (such as covering gas fees), Issuing stablecoins on permissionless blockchains. Additionally, the Fed’s policy explicitly favors permissioned blockchains over permissionless ones—a preference not shared by other federal banking agencies like the OCC and FDIC, who have already rescinded their similar positions. In effect, the Fed maintains a regulatory bias: it supports permissioned (i.e., controlled by a select group, typically large banks) stablecoins while hampering broader decentralized innovation. The Race Before the Rules Change Long points out that a stablecoin bill currently under consideration would overturn the Fed’s favoritism for permissioned blockchains. Until then, however, big banks’ private stablecoins are given a critical early-mover advantage, positioning them strongly before the stablecoin market truly opens under new legislation. She warns: “Congress should hurry up!” Custody Complications: Sand in the Wheels Beyond stablecoins, the Fed’s retained policies significantly impair banks’ ability to participate in crypto custody services. Long explains the practical issues: Transaction Fees: Custodians typically pre-estimate transaction (gas) fees, but fluctuations in on-chain fees can cause transactions to fail. Since banks cannot hold cryptoassets even for fee payment, their operations are severely limited. Risk Management Practices: Custodians often split…
The post Fed Policy Gives Big Banks a Crypto Edge, Warns CEO of Custodia Bank appeared on BitcoinEthereumNews.com.
Regulations Caitlin Long, the founder and CEO of Custodia Bank, recently shared sharp observations about the Federal Reserve’s stance on cryptocurrency regulation. In a detailed thread, Long explains how the Fed’s selective enforcement of anti-crypto policies is not only delaying innovation but also giving a major head start to big banks launching permissioned stablecoins. A Lone Anti-Crypto Rule Left Standing On January 27, 2023, the Biden administration coordinated with the Federal Reserve to release several statements targeting crypto. Since then, four of the five issued regulations have been rescinded—except one. The surviving guidance, Long notes, reveals the Fed’s consistent anti-crypto stance: it blocks banks from: Touching cryptoassets as principal, even in small amounts (such as covering gas fees), Issuing stablecoins on permissionless blockchains. Additionally, the Fed’s policy explicitly favors permissioned blockchains over permissionless ones—a preference not shared by other federal banking agencies like the OCC and FDIC, who have already rescinded their similar positions. In effect, the Fed maintains a regulatory bias: it supports permissioned (i.e., controlled by a select group, typically large banks) stablecoins while hampering broader decentralized innovation. The Race Before the Rules Change Long points out that a stablecoin bill currently under consideration would overturn the Fed’s favoritism for permissioned blockchains. Until then, however, big banks’ private stablecoins are given a critical early-mover advantage, positioning them strongly before the stablecoin market truly opens under new legislation. She warns: “Congress should hurry up!” Custody Complications: Sand in the Wheels Beyond stablecoins, the Fed’s retained policies significantly impair banks’ ability to participate in crypto custody services. Long explains the practical issues: Transaction Fees: Custodians typically pre-estimate transaction (gas) fees, but fluctuations in on-chain fees can cause transactions to fail. Since banks cannot hold cryptoassets even for fee payment, their operations are severely limited. Risk Management Practices: Custodians often split…
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