Custodia Bank CEO Caitlin Long delivered a stark assessment of crypto banking regulation at ETHDenver, stating that the US government has made no meaningful changes since Donald Trump's return to office.
Speaking at the conference on February 28, Long emphasized that despite perceived loosening of restrictions, federal banking agencies have maintained their strict anti-crypto stance. Banks are still effectively barred from handling digital assets, even in minimal amounts.
Long pointed to leadership changes needed at key regulatory bodies, particularly highlighting the Federal Deposit Insurance Corporation (FDIC). She criticized former FDIC Chair Martin Gruenberg's 15-year tenure for resisting technological advancement in banking, contributing to what she called a "backwards" system.
While the Securities and Exchange Commission (SEC) has dramatically shifted its crypto approach under Trump's administration by establishing a dedicated Crypto Task Force and reversing certain restrictive policies, banking regulations remain unchanged.
The Custodia CEO expressed hope for upcoming stablecoin legislation but stressed the need for robust consumer protections. She highlighted concerning statistics about current banking practices, noting that US banks typically hold only 8 cents in cash for every dollar of demand deposits.
Drawing lessons from the Silvergate Bank collapse, Long advocated for stricter cash reserve requirements for stablecoin issuers to prevent similar failures. She emphasized that the current model leaves banks vulnerable to runs and creates instability in the financial system.
The executive's comments come amid ongoing debates about cryptocurrency regulation and banking access for digital asset companies in the United States.