A seasoned Wall Street investor is issuing a warning that the Fed’s long battle with inflation is likely not yet over. In a new interview with Kitco News, Custodia Bank chief executive Caitlin Long says that the Fed will surprise people and continue to raise interest rates. Long says her prediction is based on her […]
The post Wall Street Veteran Caitlin Long Warns of More Rate Hikes, Says Recession Is Already Happening in the US appeared first on The Daily Hodl.
The United States’ attempts to “assassinate crypto” are illegal and unlikely to succeed because “crypto is global,” Steven Boykey Sidley, a South African professor and author, has argued. According to Sidley, many formerly U.S.-based companies and innovators have fled the country and have set up bases in countries with more “comfortable” regulatory environments. The United […]
On Monday, about a week after the collapse of Signature Bank, the Federal Deposit Insurance Corporation (FDIC) announced that Flagstar Bank, a wholly owned subsidiary of New York Community Bancorp, acquired 40 former branches of Signature and its assets. Flagstar assumed nearly all of Signature’s deposits, except for $4 billion of deposits related to the […]
The Fed’s Vice Chair for Supervision emphasized that they do not want to curb innovation, but ensure that regulations protect households and the financial system.
The United States Federal Reserve is set to create a “specialized team of experts” to keep up with developments in the cryptocurrency industry, according to a Fed official, amid concerns from the Fed of “unregulated” stablecoins.
Speaking at the Peterson Institute for International Economics in Washington on Mar. 9, Vice Chair for Supervision Michael Barr admitted that crypto could have a “transformative effect” on the financial system, but added that “the benefits of innovation can only be realized if appropriate guardrails are in place.”
According to Barr, the new crypto team will help the Federal Reserve “learn from new developments and make sure we’re up to date on innovation in this sector,” adding:
“Innovation always comes quickly, but it takes time for consumers to become aware that they could both gain and lose money on new financial products.”
Meanwhile, Barr noted that regulation needs to be a “deliberative process” to ensure a balance is reached between over-regulation which “will stifle innovation” and under-regulation which “will allow for substantial harm to households and the financial system”
Related: Fed signals a sharp rate hike in March due to inflation — Here’s how Bitcoin traders can prepare
One subsect of crypto that Barr highlighted as a point of concern was stablecoins.
He suggested that the assets backing many stablecoins in circulation are illiquid, meaning that it can be difficult to liquidate them for cash when needed, arguing:
“This mismatch in value and liquidity is the recipe for a classic bank run.”
He believes that unless regulated by the Fed, any widespread adoption of stablecoins could put households, businesses, and the broader economy at risk.
Caitlin Long, the CEO of Custodia Bank — which has consistently been rejected from joining the Federal Reserve System — pointed out the irony in the comments from Barr given her belief that Silvergate Bank collapsed due to liquidity issues arising from a bank run.
UM, WASN'T THE FED #Silvergate's REGULATOR?♀️
— Caitlin Long ⚡️ (@CaitlinLong_) March 9, 2023
"The banks we regulate, in contrast, are well protected from bank runs thru a robust array of supervisory requirements."--Fed Vice Chair Supervision Michael Barr, speaking this morning(!)
h/t @ByKyleCampbellhttps://t.co/7UsHDKfiaC
Long also pointed to the current issues facing Silicon Valley Bank, whose shares plummeted after a Mar. 8 financial update disclosed that it sold $21 billion worth of its holdings at a $1.8 billion loss, prompting fears that it was forced to sell to free up capital.
FRIENDLY REMINDER that, right as the panic was happening in Silicon Valley, the Fed’s Vice Chair for Supervision Barr said in a speech: "The banks we regulate, in contrast, are well protected from bank runs thru a robust array of supervisory requirements."https://t.co/FpPl2Qlk7x
— Caitlin Long ⚡️ (@CaitlinLong_) March 10, 2023
Caitlin Long, CEO of crypto bank Custodia, criticized the U.S. government for its handling of a massive crypto fraud that occurred months before the company’s collapse. She made her remarks in a blog post after disclosing evidence to law enforcement. Long’s post followed Custodia’s unsuccessful application to become a member of the Federal Reserve System, […]
Caitlin Long revealed that she had warned government agencies of major “fraud” in the crypto space months before several firms went bankrupt.
The CEO of Custodia Bank Caitlin Long has slammed regulators and lawmakers in Washington D.C. for their “misguided crackdown” on the crypto sector, and also for ignoring her warnings of major “fraud” allegedly conducted by now-bankrupted entities.
In a Feb. 17 blog post titled “Shame On Washington, DC For Shooting A Messenger Who Warned of Crypto Debacle,” Long tore into the government for its approach to crypto regulation, failing to protect investors and alienating good actors in the space:
“Washington’s misguided crackdown will only push risks into the shadows, leaving regulators to play whack-a-mole as the risks continuously pop up in unexpected places.”
Long stressed that with her digital asset custody firm, she’s “been calling out the worst of crypto while trying to build a lawful, compliant alternative that relegates scams to the trash heap. But [...] most of today’s policymakers seem intent on killing the high-integrity innovators.”
The Custodia Bank CEO claimed that her efforts to work with government agencies were ultimately thrown back in her face, as she recounted the spate of negative run-ins her firm has had of late.
“Custodia was simultaneously attacked by the White House, the Federal Reserve Board of Governors, the Kansas City Fed and Senator Dick Durbin (who conflated our non-leveraged, 100-percent liquid and solvent bank with FTX in a Senate floor speech),” she said, adding that:
“Custodia tried to become federally regulated – the very result bipartisan policymakers claim to want. Yet Custodia has been denied and now disparaged for daring to come through the front door.”
Her sentiments echo that of figures such as Coinbase CEO Brian Armstrong, who has suggested on multiple occasions that the agencies such as the Securities and Exchange Commission (SEC) have reacted frostily to his firm’s efforts to maintain a dialogue in good faith.
Earlier this month, Armstrong also criticized the lack of regulatory clarity in the U.S. and what appears to be a “regulation by enforcement” approach following the SEC’s move to shut down Kraken’s staking services on Feb. 9.
“Today’s regulators and lawmakers in Washington are no doubt embarrassed that they failed to stop the criminals of crypto. DC is demanding scalps,” Long wrote in the blog post, adding that:
“Calls for a crackdown today are coming from many of the same policymakers who were charmed by the fraudsters. In a 180-degree turn, they’re now throwing the baby out with the bathwater.”
Over on Twitter, Long also suggested that well before the implosion of several crypto firms in 2022, she and many others had tried to warn Washington and “help law enforcement stop” major fraud, but to no avail.
Related: SEC vs. Kraken: A one-off or opening salvo in an assault on crypto?
Long stated that she was publicly disclosing for the first time that she had “handed over evidence to law enforcement of probable crimes” committed by an unnamed crypto firm “ months before that company imploded and stuck its millions of customers with losses.”
1/ IT'S TIME FOR ME TO REVEAL A FEW THINGS. I've just published a post "Shame On Washington, DC For Shooting A Messenger Who Warned Of #Crypto Debacle." Link to post is here:https://t.co/yTWWrEk3Os pic.twitter.com/rbo21DzOv3
— Caitlin Long ⚡️ (@CaitlinLong_) February 17, 2023
Kraken co-founder and CEO Jesse Powell responded to Long’s Twitter thread, and essentially corroborated her statements by noting that: “I can't tell you how infuriating it is to have pointed out massive red flags and obviously illegal activity to regulators only to have them ignore the issues for years.”
I can't tell you how infuriating it is to have pointed out massive red flags and obviously illegal activity to regulators only to have them ignore the issues for years. "They're offshore. It's complicated. We're looking at everybody." FOR YEARS. Then to be used as their example. https://t.co/YHdNazM2UE
— Jesse Powell (@jespow) February 18, 2023
If Wyoming Governor Mark Gordon signs the bill, from July 1 individuals in Wyoming will be protected from being forced to divulge their private keys, with one limited exception.
Wyoming lawmakers have passed a bill that will prohibit courts in the state from forcing someone to disclose their digital asset private keys, with one minor exception.
The bill was passed by a vote of 41-13 in the Wyoming House of Representatives on Feb. 15, a day after passing 31-0 in the Wyoming Senate.
If the bill is approved by Wyoming Governor Mark Gordon, the law will come into effect on July 1.
“No person shall be compelled to produce a private key or make a private key known to any other person in any civil, criminal, administrative, legislative or other proceeding[s]” in the state of Wyoming, the incoming law reads.
The law includes any private keys associated with digital assets, one’s digital identity or any other interests or rights to which the private key provides.
BIG STUFF--today the #Wyoming legislature passed a bill prohibiting compelled disclosure of private keys (w/ some exceptions), by a veto-proof majority! CONGRATS to @rothfuss @JaredSOlsen @itsmikeyin & special thx @ChristopherA. Next stop @governorgordonhttps://t.co/qu0OoWMzKO
— Caitlin Long ⚡️ (@CaitlinLong_) February 16, 2023
The minor exception involves when a public key is unavailable or is unable to disclose details of the digital asset, digital identity or other interest or right.
However, the act also states that the new law will not bar one from being compelled “to produce, sell, transfer, convey or disclose a digital asset, digital identity or other interest or right” that a private key could provide access to.
It also doesn’t prevent one from being compelled to “disclose information about the digital asset, digital identity or other interest or right.”
The new law — W.S. 34-29-107 — will be titled “Production of private keys; prohibition.”
The private keys legislation comes under Chapter 29 — Digital Assets which is a subset of Title 34 — Property, Conveyances and Security Transactions.
Related: Death and self-custody: How to pass on your crypto when you die
The passing of the bill comes as the private key law has been in the works since as early as September 2019.
Wyoming has long been touted as one of the most crypto-friendly states in the U.S.
It was the first state in the U.S. to declare a decentralized autonomous organization (DAO) as a limited liability company (LLC) in July 2021, and has previously considered a state-issued stablecoin in February 2022 — however, it appears that those endeavors haven’t progressed too much since then.
Regulated crypto bank Avanti CEO Caitlin Long says tarring the entire crypto industry with the same brush is unfair.
Avanti Bank and Trust CEO Caitlin Long has posted a rebuttal to a recent New York Times article claiming that crypto and decentralized finance is “disrupting the banking industry” so fast regulators can’t keep up.
Disrupting traditional finance is exactly what crypto and DeFi aspires to do, but the piece titled “Crypto’s Rapid Move Into Banking Elicits Alarm in Washington” published on Sept. 5 had a number of inaccuracies and omissions according to Long.
The primary argument of the piece — using DeFi startup BlockFi as an example — was that crypto derivatives and highly leveraged products have become a nightmare for regulators which are scrambling to catch up. High-stakes speculation is leaving investors vulnerable to major losses according to the NYT.
But Long stated that the issue is not black and white and suggested that “anti-crypto forces” are constantly trying to paint the entire industry with the same brush. “Bad actors deserve to be called out, but the article ignores the fact that regulatory-compliant firms exist,” she added.
1/ @NYtimes story on #crypto/#banking deserves a thoughtful reply. Issue isn't black & white: anti-crypto forces try to paint us all w/ a broad brush. Bad actors deserve to be called out, but the article ignores fact that regulatory-compliant firms exist. https://t.co/IUYTctBGfV
— Caitlin Long (@CaitlinLong_) September 5, 2021
Long took particular issue with the fact that the article failed to mention that fully regulated crypto banks already exist, such as her own Wyoming-based Avanti, which launched in October 2020.
She stated that Wyoming’s special bank charter does not allow “cryptocurrency deposits.” Regulated banks can provide custody services for crypto, she continued to explain, but cannot take deposits in anything except fiat currency.
“Article misses that critical point — it’s a firewall protecting Fed's payment system from exposure to anything other than $ [USD].”
The article also pointed out that many crypto intermediaries have introduced some of the “bad behavior” from traditional finance such as extreme leverage without requiring a capital buffer. These are fair criticisms, according to Long, who has previously cautioned about leverage, adding that very fe crypto intermediaries, such as brokers or third parties acting between the bank and the blockchain, disclose information about their reserves.
Related: ‘Bitcoin is not an asset that is designed to be leveraged,’ says Caitlin Long
Long stated that DeFi platforms in particular do a far better job with transparency than crypto intermediaries or traditional banks which remains one of its best attributes. Banks settle their books once a day while crypto is settled in minutes, and for that reason, the Avanti Bank CEO concluded:
“Regulated banks that handle crypto need to be in a straightjacket. That’s the only safe & sound way to integrate the crypto & traditional systems.”
Vehemently anti-crypto U.S. Senator Elizabeth Warren was still on the warpath this week when she labeled the entire cryptocurrency industry the “new shadow bank” as reported on Sept 7. She expressed particular concerns over stablecoins and their apparent lack of transparency regarding reserves.
Avanti’s Caitlin Long expects the U.S. Federal Reserve to make it harder for crypto companies to access USD payment channels.
Caitlin Long, the founder and CEO of the pioneering bank for the crypto sector, Avanti Bank & Trust, has declared that the regulatory crackdown on crypto “has begun.”
In a lengthy tweet on July 13, the Wall Street veteran highlighted her thoughts on the current regulatory situation in the U.S., predicting that authorities will not target Bitcoin and Ethereum directly, instead opting to go after “intermediaries” and “access points” for U.S. dollars into the sector.
“The issue isn’t Bitcoin, Ethereum, or other crypto protocols, they’re just fine. The risk comes from the banks’ operational processes.”
She also noted that July 13 marked the “key event” in which the comment period for the Federal Reserve’s proposed payment system access guidelines ended, arguing that the Fed’s guidelines were partially aimed at cryptocurrencies despite not mentioning the asset class directly.
1/ THREAD ABT REGULATORY NEWS in #crypto, which I’ve been chronicling on twitter since April. Seems crackdown has begun. I dunno how it'll turn out but:
— Caitlin Long (@CaitlinLong_) July 13, 2021
* it won't impact #BTC #ETH etc directly. Base layers will keep addin' blocks
* it'll impact intermediaries & US$ access points
The guidelines, proposed on May 5, outline the system that the central bank will use to evaluate requests to access the agency’s financial services. The proposal comes amid growing requests from fintech firms and financial institutions and providers to gain access to the payments system.
Caitlin emphasized the importance of ensuring crypto firms are able to gain direct access to master accounts with the Federal Reserve, citing an example from 2017 when a number of banks carried out mass closures of bank accounts connected with crypto, stating:
“Didn’t matter whether biz was legit or scam--all were de-banked.”
Long emphasized that the same risks remain today, noting that leading U.S. exchange, Coinbase, had expressed the same concerns in its IPO prospectus.
“It’s important for our industry that law-abiding companies can gain direct US$ access on our own. It’s not just about cutting out layers of fees that many in our industry are incurring just to get US$ access,” she said.
Related: Will regulation adapt to crypto or crypto to regulation? Experts answer
Avanti, which received a bank charter in Wyoming in October 2020, has submitted its own 18-page comment letter emphasizing its concerns with the Fed’s proposed legislation.
Long, who co-founded Wyoming Blockchain Coalition in 2017, was instrumental in establishing Wyoming’s permissive regulatory apparatus regarding crypto firms.
