CEO of Custodia Bank, Caitlin, accused the American Federal Reserve of maintaining quiet anti-crypto policy that large banks are favored and at the same time presenting an appearance of relaxing the regulations.
For a long time, the Fed criticized for the withdrawal of various limiting crypto policy last week, while from January 2023 he retains an important rule that blocks banks to go directly with crypto.
She warned that the move would create an unfair advantage for large banks that want to spend private stablecoins and at the same time choke innovation on private networks.
FED’s crypto policy
In a detailed message on social media, Long argued that although the Fed rolled back four pieces of guidance, it deliberately kept a critical policy intact. The policy forbids banks to keep cryptocurrencies for their own bills, even to cover small blockchain transaction costs.
It also prohibits banks to publish Stablecoins on public block chains such as Ethereum (ETH), instead in favor of permitted, private networks that are usually managed by large financial institutions.
Long said:
“The Fed has certainly won on PR Spin.”
She added that the announcement of the Central Bank of 24 April mentioned each piece of guidance he withdrew but did not report the rule that left it untouched. She further explained that the remaining policy seriously limited the ability of banks to offer crypto guardianship services.
According to the current rules, banks are unable to pay fluctuating gas costs from their own pocket when processing transactions on chains, a technical barrier that undermines their ability to efficiently serve digital assets.
Private block chains and regulatory control
Long’s criticism comes in the midst of the growing concerns that the FED promotes private -blockchain solutions that are checked by large banks, while the acceptance of decentralized, public blockchain networks is delayed.
She warned that this strategy could anchor the dominance of the large bank about emerging stablecoin markets, giving them a lead, while other institutions are waiting for new federal stabile legislation.
In the meantime, Senator Cynthia Lummis recently repeated Long’s concerns and criticized the newest rollback from the Fed as ‘Just Lip Service’.
Lummis argued that the Central Bank continues to use warnings “reputation risks” to limit banks to enter into Bitcoin and other digital assets, to label them “unsafe and inadequate”. She promised to keep FED chairman Jerome Powell responsible, warning that many architects of the past still have an influence on policy of policy today.
Despite the fact that the government of President Donald Trump makes efforts for a broader urge to a more crypto-friendly environment, Long and Lummis claim that federal supervisors remain resistant to full-scaly blockchain innovation.