Custodia Bank's CEO has strongly criticized Washington's "misguided" crackdown on cryptocurrencies, calling it a "grave mistake"
He argued that the government's actions are stifling innovation and preventing the industry from reaching its full potential
He further stated that the government should focus on creating a regulatory framework that encourages innovation and growth, rather than one that stifles it
Crackdown on cryptocurrencies, calling it a "grave mistake".
Caitlin Long alerted government agencies of potential fraud in the cryptocurrency space months prior to the bankruptcy of several firms. Her warning was a prescient one, as it ultimately proved to be a harbinger of the financial ruin that was to come.
Caitlin Long, CEO of Custodia Bank, has harshly criticized regulators and lawmakers in Washington D.C. for their misguided crackdown on the crypto sector, and for disregarding her warnings of potential fraud conducted by now-bankrupted entities. She believes that their actions have been detrimental to the industry and have caused significant damage.
In a February 17th blog post titled "Shame on Washington, DC for Shooting a Messenger Who Warned of Crypto Debacle," Long harshly criticized the government for its approach to crypto regulation, arguing that it fails to protect investors and drives away good actors in the space. He argued that :
"Washington's misguided crackdown will only push risks into the shadows, leaving regulators to play a never-ending game of whack-a-mole as the risks continuously emerge in unexpected places."
Long stressed that with her digital asset custody firm, Custodia, she has been striving to create a lawful, compliant alternative to the scams that plague the crypto industry, yet most of today's policymakers seem intent on stifling the high-integrity innovators.
The Custodia Bank CEO lamented that her attempts to work with government agencies have been met with hostility, citing the White House, the Federal Reserve Board of Governors, the Kansas City Fed, and Senator Durbin, who conflated Custodia's non-leveraged, 100-percent liquid and solvent bank with FTX in a Senate floor speech.
“We tried to become federally regulated – the very result bipartisan policymakers claim to want – yet we have been denied and now disparaged for daring to come through the front door,” she said.
Her sentiments echo those of figures such as Coinbase CEO Brian Armstrong, who has suggested on multiple occasions that agencies like the Securities and Exchange Commission (SEC) have reacted coldly to his firm's attempts to maintain an open and honest dialogue.
Recently, Armstrong also expressed his dissatisfaction with the lack of regulatory clarity in the U.S. and the SEC's "regulation by enforcement" approach, which was demonstrated by their decision to shut down Kraken's staking services on February 9th.
Today's regulators and lawmakers in Washington are undoubtedly embarrassed that they were unable to prevent the criminal activities associated with cryptocurrency. As a result, DC is now demanding accountability. Long wrote in a blog post, noting that:
"The same policymakers who were once captivated by the fraudsters are now calling for a crackdown. In a complete reversal, they are now attempting to punish the innocent along with the guilty."
On Twitter, Long revealed that she and many others had attempted to alert Washington and aid law enforcement in preventing major fraud prior to the collapse of several crypto firms in 2022, yet their efforts were unsuccessful.
She also divulged for the first time that she had provided evidence of potential criminal activity to law enforcement by an unnamed crypto firm months before its downfall, leaving its millions of customers with losses.
Kraken co-founder and CEO Jesse Powell responded to Long's Twitter thread, corroborating her statements and expressing his frustration with regulators who have "ignored the issues for years." He noted, "It's infuriating to point out massive red flags and obviously illegal activity to regulators, only to have them turn a blind eye."
Also, Read - SEC: We Love Crypto More than Satoshi and Vitalik Combined
