A recent interview with Caitlin Long, founder and CEO of Custodia Bank, has shed light on the corrupt practices behind US efforts to “debank” crypto firms. The Federal Reserve’s denial of access to a master account for Custodia’s crypto services is a prime example.
In 2023, the Fed cited Custodia’s involvement in “crypto-asset-related activities” as the reason for the decision. This effectively blocked Custodia from servicing crypto firms and accessing payment rails for inter-bank transfers.
Custodia took legal action against the Fed to reverse the decision, but the outcome was unclear at press time. Industry outrage over alleged debanking reached a peak when a lawsuit spearheaded by Coinbase led to the release of letters showing US banking regulators asked certain financial institutions to pause crypto banking activities.
US President Donald Trump has criticized the prior administration’s approach to crypto-friendly banks and vowed to better integrate cryptocurrencies, including stablecoins, into the regulated financial system. In January 2024, Trump issued an executive order prioritizing “fair and open access to banking services” for digital asset firms.
However, regulatory clarity remains elusive. The battle for preferential rules among different types of stablecoin issuers is ongoing, with major banks and incumbent issuers competing for favorable treatment. Tether, not based in the US, is also caught up in this “scrum.”
The result has been a significant influx of money flowing from the crypto industry to Washington D.C., where industry players are locked in intense battles over regulations.
“We’re seeing an incredible flow of money going from banks and the crypto industry to people in Washington D.C.,” Long said, adding that it’s unclear how this will all play out.
Source: https://cointelegraph.com/news/custodia-bank-ceo-calls-out-washington-debanking-skullduggery