- Caitlin Long critiques FSOC’s stance on stablecoins, citing debanking and market concentration issues.
- Operation Chokepoint 2.0 evidence emerges, spotlighting FDIC’s role in crypto banking restrictions.
- Trump’s crypto-friendly appointments spark optimism for clearer regulations and industry growth.
The Financial Stability Oversight Council, FSOC, has raised the concern of concentration risk within the cryptocurrency market. In its latest report, it pointed out stablecoins as some of the risks that could affect the financial stability of the system. The FSOC also noted that one firm controls approximately 70% of the market share and this will lead to concentration risks.
The report also asserted that most stables issued by stablecoin issuers mainly function outside federal prudential regulatory frameworks. This conclusion ignited criticism from the Founder and CEO of Custodia Bank, Caitlin Long. Long responding to these issues in a public announcement, stressed that the FSOC is contradictory in their arguments.
Caitlin Long Highlights Regulatory Hypocrisy
Caitlin Long criticized regulators for their role in creating concentration risks within the crypto sector. She argued that anti-crypto measures have limited the number of banks willing to work with crypto firms. This regulatory crackdown, according to Long, has pushed stablecoin issuers and crypto companies to move operations outside the U.S.
Long also called out the FSOC for overlooking state-level regulation of stablecoin issuers. She noted that some states have already developed robust frameworks to oversee these companies. According to Long, the FSOC’s approach disregards these efforts, further complicating the crypto regulatory environment.
Additionally, Long labeled the FSOC’s stance as hypocritical. She pointed out that the same regulators who restricted banking access for crypto issuers are now complaining about concentration risks.
Operation Chokepoint 2.0 Raises Concerns
The issue of limited banking access for crypto firms has resurfaced with new evidence from Coinbase. The exchange revealed letters implicating the FDIC in what is being referred to as Operation Chokepoint 2.0. These documents suggest a coordinated effort to limit crypto firms’ access to banking services.
Pro-crypto advocates are urging the Trump administration to investigate this matter. Prominent figures like attorney John Deaton believe these actions require immediate attention. Deaton has called for reforms to prevent such regulatory overreach in the future.
Trump Administration Fuels Optimism for Crypto Policy
The crypto industry has high expectations from Donald Trump’s administration regarding new changes. This move has been followed closely by the appointment of Scott Bessent to head the U.S. Treasury Department. The Treasury has a crucial position in regulating and creating policies that affect the banking and cryptocurrency industries.
Additionally, the appointment of David Sacks as Crypto and AI Czar has sparked hope for more favorable regulations. Sacks is a known advocate for cryptocurrency and has expressed support for greater regulatory clarity. Industry leaders believe these appointments signal a shift toward a more pro-innovation approach.
The crypto sector is now watching closely for further developments as the new administration takes charge. Industry participants hope these changes will create a more supportive environment for growth and innovation in the U.S.
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