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- Caitlin Long, CEO of regulated crypto bank Avanti, believes it is unjust to paint the entire crypto business with the same brush
- What bitcoin and DeFi strive to do is to disrupt traditional finance
- Long took issue with the article’s failure to mention that fully regulated cryptocurrency banks already exist
Caitlin Long, CEO of regulated crypto bank Avanti, believes it is unjust to paint the entire crypto business with the same brush. Caitlin Long, CEO of Avanti Bank and Trust, responded to a recent New York Times piece asserting that crypto and decentralized finance are disrupting the banking industry at a pace that regulators are unable to keep up with. Crypto and DeFi seek to disrupt traditional finance, but according to Long, the article titled Crypto’s Rapid Move Into Banking Elicits Alarm in Washington published on Sept. 5 contained a number of falsehoods and omissions.
The main point of view being explained
The piece’s main point — illustrated by the example of DeFi startup BlockFi — was that crypto derivatives and highly leveraged products have become a nightmare for regulators scrambling to keep up. According to the New York Times, high-stakes speculation exposes investors to significant losses. Long, on the other hand, noted that the issue is not black and white and that anti-crypto groups are continually attempting to paint the entire industry with one brush. She went on to say that while bad actors should be pointed out, the story ignores the fact that regulatory-compliant businesses exist.
Long takes issue with the article’s failure to note that fully regulated crypto banks, such as her own Avanti in Wyoming, which debuted in October 2020, already exist. She added that cryptocurrency deposits are not permitted under Wyoming’s unique bank charter. She went on to say that regulated banks can provide crypto custody services, but they can’t receive deposits in anything other than fiat currency.
Long’s warning related to leverage
That crucial aspect is missed in the article: it’s a firewall that protects the Fed’s payment system from being exposed to anything other than $ [USD]. Many crypto intermediaries have adopted some of the negative behavior from traditional banking, such as high leverage, without having a capital cushion, according to the report. According to Long, who has previously warned about leverage, relatively few crypto middlemen, such as brokers or third parties working between the bank and the blockchain, reveal information about their reserves.
Long has noted that DeFi platforms, in particular, perform significantly better in terms of transparency than crypto middlemen or traditional banks and that this is one of its strongest features. Because banks settle their books once a day, but crypto settles in minutes, the Avanti Bank CEO concluded: Regulated banks that handle crypto must be in a straightjacket. That is the only secure and reliable method of integrating crypto and traditional systems.
Vehemently opposed to cryptography Senator Elizabeth Warren continued her crusade this week, calling the entire Bitcoin business a new shadow bank, as reported on September 7. She was particularly concerned about stablecoins and their seeming lack of reserve transparency.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
