Caitlin Long, founder and CEO of the pioneering bank for the crypto sector Avanti Bank & Trust, has declared that the regulatory crackdown on crypto “has begun.”
In a lengthy tweet on Tuesday, the Wall Street veteran highlighted her thoughts on the current regulatory situation in the United States, predicting that authorities will not target Bitcoin (BTC) and Ether (ETH) directly, instead opting to go after “intermediaries” and “access points” for U.S. dollars into the sector.
“The issue isn’t #Bitcoin, #Ethereum, or other crypto protocols — they’re just fine. The risk comes from the banks’ operational processes.”
She also noted that Tuesday marked the “key event,” in which the comment period for the Federal Reserve’s proposed payment system access guidelines ended, arguing that the Fed’s guidelines were partially aimed at cryptocurrencies despite not mentioning the asset class directly.
The guidelines, proposed on May 5, outline the system that the central bank will use to evaluate requests to access the agency’s financial services. The proposal comes amid growing requests from fintech firms and financial institutions and providers to gain access to the payments system.
Long emphasized the importance of ensuring crypto firms are able to gain direct access to master accounts with the Federal Reserve, citing an example from 2017 when a number of banks carried out mass closures of bank accounts connected with crypto, stating:
“Didn’t matter whether biz was legit or scam--all were de-banked.”
Long emphasized that the same risks remain today, noting that leading U.S. exchange Coinbase had expressed the same concerns in its IPO prospectus.
“It’s important for our industry that law-abiding companies can gain direct US$ access on our own. It’s not just about cutting out layers of fees that many in our industry are incurring just to get US$ access,” she said.
Related: Will regulation adapt to crypto or crypto to regulation? Experts answer
Avanti, which received a bank charter in Wyoming in October 2020, has submitted its own 18-page comment letter emphasizing its concerns with the Fed’s proposed legislation.
Long, who co-founded the Wyoming Blockchain Coalition in 2017, was instrumental in establishing Wyoming’s permissive regulatory apparatus regarding crypto firms.