Wall Street Veteran Explains How US Regulators Are Protecting Incumbents

The Defiant


Today, we're joined by Caitlin Long, the founder, and CEO of Custodia Bank, which provides payment rails and custody services for digital assets. We explore the recent surge of institutional interest in crypto, regulatory pressure in the US, and whether US regulators are prioritizing investor protection or incumbent interest. But first, we start by delving into Caitlin's journey as an early adopter of blockchain tech.

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7 Key Takeaways

  1. EDX the crypto exchange backed by Fidelity, Schwab, and Citadel went live and  BlackRock filed for a Bitcoin ETF, just a week after the SEC lawsuit against Coinbase came out. Making SEC actions look targeted against crypto-native companies, clearing the way for the biggest names in traditional finance.
  2. The Fed is showing inconsistency, double standards, incumbency bias, and non-adherence to the law when it comes to the approval or denial of Fed Master accounts.
  3. Fed Master accounts allow businesses to bank directly with the Fed and are beneficial because it's cheaper, without intermediaries, or counterparty risk. Fed master accounts are a major fight, and the Fed shows favoritism for incumbents.
  4. The SEC acting outside of its jurisdiction is not likely to withstand scrutiny. The Grayscale lawsuit and in particular the XRP lawsuit, will be crucial to set the precedents.
  5. ETFs can be seen as a double-edged sword, enabling big institutions to start doing leverage-based financialization of Bitcoin. Leveraged Bitcoin can infect the traditional financial industry.
  6. The Fed can print money, but no Bitcoin can be printed if something bad happens. What the Fed did to provide liquidity for the banks underwater, US treasuries, and the BTFP portfolio, nobody will be able to do for Bitcoin. Bitcoin doesn't bail.
  7. If the US regulatory crackdown continues, crypto will move on. The base layer; Blockchains will keep going and thrive. Try telling GenZ they can’t use crypto. It’s code, anyone can run it from their computer or phone. 8 billion people in the world have access to it from a smartphone. It’s unstoppable.


  • Timestamps
  • 00:00 Introduction
  • 00:30 Background and Custodia Bank
  • 06:20 The SEC incumbency bias
  • 22:05 ETFs as a double-edged sword
  • 31:22 Bitcoin doesn't bail out
  • 39:54 CeFi regulation and concerns
  • 45:11 Future of Crypto if the US Doesn’t Support it
  • 50:00 How are you defiant?


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