Feb 19, 2023

Washington Slammed for Ignoring Crypto Fraud Warnings

Custodia Bank CEO Caitlin Long has expressed her deep frustration with the current regulatory approach to the crypto sector. In a Feb. 17 blog post titled Shame On Washington, DC For Shooting A Messenger Who Warned Of Crypto Debacle, Long argued that the government’s “misguided crackdown” on the space is only pushing risks into the shadows and alienating the good actors.

Long has been vocal about her efforts to build a lawful, compliant alternative to the scams that have plagued the industry and has attempted to work with the government to create a more transparent and secure environment. However, she claims that her efforts have been met with resistance and even scorn from the White House, Federal Reserve Board of Governors, Kansas City Fed and Senator Dick Durbin.

Long went on to explain that Custodia had tried to become federally regulated, only to be denied and disparaged for doing so. This sentiment was echoed by Coinbase CEO Brian Armstrong, who has criticized the lack of regulatory clarity in the U.S. and what appears to be a “regulation by enforcement” approach.

In addition, Long shared that she had handed over evidence of probable crimes to law enforcement months prior to the implosion of several crypto firms in 2022. Kraken co-founder and CEO Jesse Powell corroborated her statements by noting that it is “infuriating” to have pointed out red flags and illegal activity that went unheeded by regulators.

The Custodia Bank CEO’s blog post serves as a stark reminder of the importance of regulation in the crypto space and how it can be used to protect investors. It also highlights the need for lawmakers to recognize the efforts of good actors in the space and provide them with the necessary support and resources to ensure the success of the industry.

In the blog post, Long also called for the adoption of a new approach to crypto regulation, one that is focused on promoting innovation and protecting investors from fraud. She believes that this approach should involve more communication between regulators, lawmakers, and industry participants, as well as greater transparency in the regulatory process.

As the crypto sector continues to grow, it is essential that regulators and lawmakers recognize the potential of the space and take the necessary steps to ensure its long-term success. This includes providing a clear regulatory framework that allows for the safe and responsible use of crypto assets, as well as creating the necessary infrastructure for NFTs and other web3 technologies.

In addition, regulators and lawmakers should be open to the use of NFT marketing and promotion to increase awareness of the sector and help bring more people into the space. This could include working with NFT marketing agencies to create engaging content and campaigns that reach a wider audience.

Ultimately, it is important for regulators and lawmakers to ensure that the crypto sector is a safe and secure space for investors, and that the industry is able to thrive in the long term. This will require a collaborative effort between regulators, lawmakers, and the industry itself, and the adoption of a regulatory framework that is focused on promoting innovation and protecting investors.

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