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Caitlin Long, founder and CEO of Custodia Bank, criticized the recent report by the Financial Stability Oversight Council (FSOC) regarding “concentration risks” in the cryptocurrency industry. According to the FSOC report, stablecoins pose a potential risk to financial stability.
Cryptocurrency Risk Report
The report indicates that the stablecoin market is dominated by a single firm, which holds a 70% market share. The FSOC argues that this dominance by one company presents a significant risk. Additionally, it highlighted that stablecoin companies operate outside federal regulatory frameworks.
This second point prompted Long to take action. She noted that regulators’ anti-crypto policies have prevented many banks from servicing crypto issuers. This situation has led some stablecoin issuers and crypto firms to withdraw from the U.S. market.
FSOC’s Dilemma
Caitlin Long criticized FSOC for the declining number of banks serving the crypto industry, arguing that this behavior is hypocritical. She also pointed out that FSOC has ignored state regulations concerning stablecoin issuers.
Caitlin Long: “FSOC’s attitude towards state regulators is unacceptable. The lack of control over stablecoins threatens financial stability.”
After highlighting FSOC’s inconsistencies, Long expressed eagerness for the first report under the Donald Trump administration. The cryptocurrency industry holds expectations that the new Trump administration can positively influence future regulations.
The appointment of Scott Bessent, a crypto-friendly figure, to the U.S. Treasury is set to play a significant role in the regulation of banks. Notably, crypto attorney John Deaton requested that the new administration investigate Operation Chokepoint 2.0.
Overall, the cryptocurrency industry hopes these developments will create positive impacts on its future. Organizations can operate in a more stable market with the resolution of regulatory uncertainties. Regulating stablecoins could be a crucial step for financial stability.
In the future, clearer policies from FSOC and other regulatory bodies are expected regarding the cryptocurrency industry. This process could reduce uncertainties for market players, fostering a safer environment.
