Caitlin Lengthy, CEO of Custodia Bank, criticizes the FED for its position on cryptocurrencies and fintech companies trying to operate in a regulated environment in one of her most recent podcast appearances on Considering Crypto. According to Lengthy, the Fed has demonstrated blatant “incumbency bias” in its differential treatment of established traditional financial institutions against fresh crypto-focused firms.
Lengthy mentioned the incident of the Bank of New York Mellon getting approval to custody of digital assets immediately after Custodia’s application was denied, despite the fact that both submitted essentially identical business plans. She also disclosed that the Fed overruled the state regulator and exerted pressure on the New York Division of Monetary Services to deny PayPal’s new stablecoin approval.
Lengthy contends that the Fed‘s tough tactics have deterred cryptocurrency companies from seeking regulation, causing activity to shift into unregulated channels. She claimed that the Fed coerced Custodia into a drawn-out application process with encouraging advice, only to issue a crucial denial.
The CEO thinks the Fed should adopt an “enabling” approach to cryptocurrency regulation, outlining requirements for businesses to meet while allowing compliant organizations to operate. She cited Wyoming’s Special Objective Depository Establishment regulations as an example of effective crypto supervision.
Lengthy stated that Custodia Financial Bank is close to launching institutional Bitcoin custody services with possibilities not currently available out there, despite delays with the Fed.
Lengthy alluded to a design that adheres to the self-custody principles of Bitcoin while yet utilizing Custodia’s bank protections. The company prefers to work with long-term customers over short-term speculators.