Custodia Bank CEO Calls Out FSOC Over Crypto “Concentration Risk” Claim

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As a seasoned researcher with a knack for deciphering the intricacies of financial regulations and their impact on the burgeoning crypto industry, I find myself deeply engrossed in the latest developments surrounding Custodia Bank and the Financial Stability Oversight Council (FSOC). The FSOC’s recent report on stablecoins and their potential risks to financial stability has sparked a heated debate, with Custodia Bank CEO Caitlin Long taking a strong stance.

Caitlin Long, the head of Custodia Bank and its founder, has brought attention to a recent move by the Financial Stability Oversight Council (FSOC). On the X platform, she directly addressed a new report from the FSOC that highlighted concerns about “concentration risks” in the cryptocurrency sector. The report specifically flagged stablecoins as a potential threat to financial stability.

Custodia Bank CEO Flags The Obvious

According to the FSOC’s assertions, it’s evident that the market for stablecoins is dominated by a single company, accounting for about 70% of the entire industry. Moreover, they stated that these stablecoin businesses function beyond the purview of the federal regulatory system pertaining to prudential oversight.

This second point elicited a response from the CEO of Custodia Bank. She claimed that due to the regulators’ wide-reaching crackdown on cryptocurrencies, many banks have been compelled to quietly discontinue their services for crypto issuers in a discreet manner. According to her, this practice has driven some stablecoin issuers and crypto companies out of the US market.

Caitlin Long highlighted that it’s contradictory for the Financial Stability Oversight Council (FSOC) to name fewer banks involved in the cryptocurrency sector, as this could be seen as hypocrisy. Furthermore, she criticized the FSOC for seemingly ignoring state regulations regarding stablecoin issuers.

Here’s an illustration of the apparent frustration shown by FSOC towards state regulatory bodies: During the Biden/Warren era, they had several chances to incorporate cryptocurrency under federal regulation, yet they obstructed each attempt. It seems that this predicament is self-inflicted!

— Caitlin Long (@CaitlinLong_) December 6, 2024

In her statement highlighting inconsistencies, the CEO of Custodia Bank expressed eagerness for the initial report from the Financial Stability Oversight Council, chaired by Donald Trump.

Operation Chokepoint 2.0 Proof Issued

The conversations around the government crackdown on banks took a new turn with a new evidence from Coinbase Exchange. In the firm’s investigation of the FDIC, Coinbase released letters that shows how the regulator contributed to Operation Chokepoint 2.0.

Currently, there’s a great deal of anticipation within the cryptocurrency sector regarding how the upcoming Donald Trump administration will impact them. Notably, Trump has chosen Scott Bessent to head the U.S. Treasury Department. This department is crucial because it will significantly influence banking regulations.

In light of industry anticipation, pro-cryptocurrency attorney John Deaton has urged the incoming government to investigate Operation Chokepoint 2.0. Although no official response has been given so far, President Trump has appointed David Sacks as the advisor for Cryptocurrencies and Artificial Intelligence.

With this role, there might be changes in policies that might favor the crypto firm.

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2024-12-07 01:06