Custodia CEO slams US authorities’ misguided crypto regulation approach

On Feb 19, 2023

Caitlin Long criticised the US regulatory bodies over a bad approach to regulating the crypto sector, where the majority of the good players in the Crypto sector are facing problems.

Caitlin Long is the CEO of Custodia Bank. This company is a bank formed to be a compliant bridge between cryptocurrencies and the US dollar payments system. In the past, Long reported many big crypto frauds to government agencies anonymously.

On 18 Feb 2023, Long took to Twitter to show her opinion on the current regulatory approach of Washington DC regulatory bodies on the crypto sector.

Long disclosed that her company reported many crypto frauds or risky financial activities in the crypto sector but in return she got nothing.

3/ (b) I warned bank regulators of mounting bank-run risk inside banks serving the crypto industry b4 the bank runs ultimately hit.

How many correctly foresaw the crypto lender implosion, warned regulators of impending bank runs & tried to help law enforcement stop a big fraud?
— Caitlin Long 🔑⚡️🟠 (@CaitlinLong_) February 17, 2023

She said that Custodia tried to become federally regulated but faced rejection. Further through the long Twitter thread, Long noted that regulators are interfering in those matters which are not under their authority, and also their misguided rulings are degrading the growth of good players & failing to save the crypto investors.

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14/ This tech will steadily disintermediate banks bc anyone w/ an internet connection can run the code & use US dollars w/o banks. DC's misguided crackdown will only push risks into shadows, leaving regulators to play whack-a-mole as risks continuously pop up in unexpected places
— Caitlin Long 🔑⚡️🟠 (@CaitlinLong_) February 17, 2023

Many crypto companies’ executives responded to Long’s tweet thread. In particular, Kraken exchange CEO & founder Jesse Powell suggested ignoring them for a few years now.

I can't tell you how infuriating it is to have pointed out massive red flags and obviously illegal activity to regulators only to have them ignore the issues for years. "They're offshore. It's complicated. We're looking at everybody." FOR YEARS. Then to be used as their example. https://t.co/YHdNazM2UE
— Jesse Powell (@jespow) February 18, 2023

Notably, Kraken recently faced a $30 million fine over crypto staking services. The United States Securities and Exchange Commission (SEC) claimed that Kraken’s crypto-staking services were against the securities Act. Under the settlement, Kraken agreed to suspend its crypto-staking services to US citizens.

Many crypto proponents said that Kraken did a mistake and they should move toward court to fight against the SEC’s rude ruling. Kraken’s CEO also admitted his mistake and revealed that Kraken’s current financial position is not much better to fight against SEC.