Federal Reserve Yielding To Political Ploy To Stiffen Innovation, Caitlin Long
In an interview with FOX Business reporter Eleanor Terrett, Custodia Bank CEO Caitlin Long talked about how the decision of the court in the case with the Federal Reserve is contributing to impeding general tech innovation.
Caitlin Long on the Federal Reserve Win
As a background to the case, Custodia Bank once applied to be supervised by the United States Federal Reserve. The crypto-friendly bank requested access to a Master Account through the Kansas City Fed but was denied by the agency. This master account was supposed to grant Custodia Bank authorization to perform inter-bank transfers and other key Fed payment services.
However, the Federal Reserve claimed that Custodia Bank did not meet the requirements set out in the law. The denial of access to the payment system forced the bank to sue the Federal Reserve. Many crypto industry players including pro-XRP lawyer John E. Deaton expected that the lawsuit would be in favor of the bank. This anticipated victory was regarded as crucial for the general crypto ecosystem, considering that it would put the industry in another light.
At the time, Terrett stated that winning the lawsuit would make Long the first woman to take on the Federal Reserve and win.
About two weeks ago, Wyoming District Judge Scott Skavdahl ruled in favor of the United States Federal Reserve in the lawsuit against Custodia Bank. In addition, Custodia’s request for a declaratory judgment was refused, further strengthening the position of the Federal Reserve.
While Caitlin Long, in the interview said the law is the law, she hinted at a possible appeal as she noted that the final law might be made at the Appellate Court. As part of her comment regarding the lawsuit, Long identified the political skewness of the Federal Reserve, one that is stiffening innovations beyond just crypto, but into the broader tech ecosystem in the country.
The Plot Against CeFi and DeFi Integration
When specifically asked about how she felt about the court’s decision in the lawsuit, Long acknowledged that such court cases could go in either direction. Long ascertained that Custodia Bank has constantly sought to work with the Federal Reserve including attending a lot of meetings. Meanwhile, Terrett believes strongly that Custodia Bank has a strong ground for an appeal.
Custodia Bank’s move to integrate traditional finance (TradFi) with decentralized Finance (DeFi) is one of the innovations that several others have been trying to introduce into the financial sector. This is similar to the result that the crypto payment platform Ripple Labs is trying to achieve with its potential USD-pegged stablecoin.
Many of these firms have faced some kind of obstacle that ends up becoming a clog to the wheels of their innovation. These obstacles have most times come in the guise of regulations and requirements from authorities, and crypto projects are beginning to perceive the challenges as a political ploy.
As Long noted, this is a broader ploy by lawmakers like Senator Elizabeth Warren in her fight against digital currency innovation. While this remains the status quo, crypto innovators are rallying around pro-crypto attorney John Deaton who is running against Sen Warren for a Massachusetts seat at the Capitol.
With this twist, expectations are high that should Deaton succeed, changes might come to the crypto regulatory landscape in the country.
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Filed under: News - @ January 1, 1970 12:00 am