In an interview with Cowboy State Daily, Custodia Bank’s CEO, Caitlin Long, has spoken out against the regulatory crackdown on digital assets by Washington, D.C.
Long voiced opposition in the interview, stating that despite facing significant regulatory hurdles, her Bank has adopted an innovative approach to support the industry while proudly supporting the digital asset movement.
Pushing through regulatory challenges
Facing a regulatory crackdown on the digital asset industry, Custodia Bank found itself in a difficult position, according to the interview. Earlier this year, the bank sued the Federal Reserve for rejecting its master account application. The lawsuit is ongoing, and Long is adamant about continuing the fight.
"Washington, D.C. might be trying to lock down digital assets, but states are pushing back, and she’s proud to be part of that. '…what New York did last week put us in good company.'”#cowboyup #rideforthebrandhttps://t.co/qUn0Cfa6VV
— Caitlin Long 🔑⚡️🟠 (@CaitlinLong_) August 15, 2023
Long had to adapt her business to move forward legally. Custodia Bank started handling money market mutual funds and U.S. dollar deposits to sustain its operations and support the digital asset industry. While the bank had not initially planned to provide these services, Long saw them as a necessary pivot in the current regulatory climate.
“We got pretty much deluged with inquiries — and congratulations,” said Long, who believes that the digital asset industry is currently underserved. Even without a master account for transactions, Custodia Bank has found partners to handle transaction clearance for them.
States’ resistance to Federal intervention
Despite federal resistance to digital assets, states like New York and Wyoming are fighting back. A recent example Long cited is a New York trust company launching a PayPal stablecoin, despite the Fed’s objections. “The Fed objected to New York’s approval of that PayPal stablecoin, but they had no jurisdiction to effectuate that objection,” stated Long.
Long believes states are pushing back effectively against federal efforts to suppress digital assets. Long stated;
“So it is interesting because the states are pushing back and, in this example, New York and Wyoming are aligned, even though the Fed is pushing back, the digital asset industry is a lawful industry and it cannot de-bank the industry entirely. So what New York did last week put us in good company.”
Bitcoin custody in the pipeline
As per the interview, Custodia Bank has more ambitious plans. Long revealed that Custodia’s original plan included Bitcoin custody. The bank first had to establish U.S. dollar deposits, a prerequisite for operating as a bank. Custodia’s compliance with Wyoming’s state banking charter for Special Purpose Depository Institutions, requiring it to be a 100% fully reserved bank, sets it apart from other institutions.
In conclusion, Custodia Bank’s CEO is determined to support the digital asset industry despite its regulatory challenges. By adapting her business to handle money market mutual funds and U.S. dollar deposits, Long has found a way to sustain Custodia Bank’s operations while still supporting the digital asset movement.
With states like New York and Wyoming pushing back against federal efforts to suppress digital assets, it is clear that there is growing support for the industry. Custodia Bank’s plans to offer Bitcoin custody services further highlight the potential for digital assets to become an integral part of the financial landscape.