Custodia Bank CEO, Criticism Of Fed's 'Big Bank Stablecoin Preferential' Policy

Caitlin Long, founder and CEO of Custodia Bank, strongly criticized the U.S. Federal Reserve for maintaining a stablecoin policy favorable to large banks.

On 27th (local time), Long pointed out through X that while the Fed had recently withdrawn some cryptocurrency-related guidelines, the core guidance jointly announced with the Biden administration on January 27 last year remains unchanged. The guidance prevents banks from directly trading cryptocurrency assets and prohibits the issuance of stablecoins on permissionless blockchains.

She argued that "the Fed is providing regulatory clear favoritism to permissioned stablecoins, specifically the versions issued by major banks." She further criticized that this regulatory environment provides favorable conditions for private financial institutions to move first in the market.

Long emphasized that if a federal-level stablecoin bill is passed, it may overturn the Fed's stance, saying, "Congress needs to hurry up."

Additionally, she pointed out that the Fed's policy restricts banks from directly entering the major cryptocurrency markets such as Bitcoin, Ethereum, and Solana, and imposes constraints on the payment of essential on-chain transaction fees when providing cryptocurrency custody services.

Long added, "The Fed has promoted as if it had withdrawn many regulations externally, but in reality, the most important restrictions remain unchanged," and noted, "Many people failed to grasp this point."

This statement has become an opportunity to highlight the issue of regulatory entry barriers within the digital asset market amid ongoing debates about the balance between the cryptocurrency industry and traditional finance.