Caitlin Long warns that the Federal Reserve (Fed) deceived the public — and in a much more cunning way than anyone realized.

🔹 A Secret Continuation of Anti-Crypto Policy:

Caitlin Long, CEO of Custodia Bank, has pointed out that although the Fed publicly announced the repeal of four strict anti-crypto regulations, it actually maintained the crucial restriction in force. In a series of posts on X (formerly Twitter), she explained that this surviving policy remains a fundamental barrier preventing banks from engaging with cryptocurrencies.

🔹 What the Policy Truly Means:

The pivotal anti-crypto directive that still stands dates back to January 27, 2023, when the White House under Joe Biden openly targeted the cryptocurrency sector. This directive:

  • Prohibits banks from holding cryptocurrencies as collateral (meaning they cannot even cover minimal transaction fees).

  • Blocks the issuance of stablecoins on public blockchains.

  • Favors approved blockchains controlled by large banks—even though other regulators, such as the OCC and FDIC, have abandoned that notion.


Caitlin emphasized, “The Fed continues to favor stablecoins from major players, giving them an early advantage before the new stablecoin laws come into effect.”

🔹 An Advantage for Big Banks, Barriers for Others:

According to Caitlin, the Fed not only protects the interests of giant Wall Street banks but also complicates matters for those looking to securely store cryptocurrencies.

  • Banks aiming to act as crypto custodians often need to cover gas fees (the charges required for processing transactions). If network fees suddenly spike, a bank cannot pay the additional amount, leading to a failed transaction.

  • This issue is compounded by the fact that custodians frequently split large crypto holdings into smaller parts to manage risk—which means more transactions and more fees each time.

In effect, the Fed’s setup makes it too risky for banks to offer crypto custody services, thereby giving large banks a head start in introducing “approved stablecoins” before the market fully opens.

🔹 A Deceptive PR Campaign and Media Silence:

Caitlin severely criticized the Fed for its public relations maneuver. While the Fed loudly announced which rules it had abolished, it silently left the most critical restriction intact. “The Fed definitely won in PR,” she wrote, warning that even astute people were misled.

According to her, the White House is portrayed as being satisfied with the Fed’s actions while conveniently overlooking (or feigning ignorance of) the significant issue—the ongoing prohibition on banks handling cryptocurrencies.

This maneuver raises uncomfortable questions: What exactly did the Fed promise the White House? And how might the relationship between the two change in the future?

🔹 Not Everyone Is Fooled:

Cynthia Lummis, the chair of the Senate Banking Subcommittee on Digital Assets, was not deceived by the Fed’s trick. She labeled their move a “service on a silver platter” and made it clear that she intends to address what she called the “misleading maneuver.”

In her own post on X, she reminded that, unlike other institutions, the Fed still uses “reputational risk” as a tool in banking supervision. Moreover, she warned that the same officials who once pushed the notorious Chokepoint 2.0 operation—which aimed to shut banks out of controversial industries during the Biden era—are still the ones shaping crypto policy today.


#FederalReserve , #CryptoRegulation , #Stablecoins , #DigitalAssets , #CryptoNewss

Stay one step ahead – follow our profile and stay informed about everything important in the world of cryptocurrencies!

Notice:

,,The information and views presented in this article are intended solely for educational purposes and should not be taken as investment advice in any situation. The content of these pages should not be regarded as financial, investment, or any other form of advice. We caution that investing in cryptocurrencies can be risky and may lead to financial losses.“