{"id":45992,"date":"2021-07-13T13:08:04","date_gmt":"2021-07-13T10:08:04","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=45992"},"modified":"2025-09-01T14:07:24","modified_gmt":"2025-09-01T11:07:24","slug":"avanti-ceo-caitlin-long-criticises-fed-stance-on-cryptocurrency-firms","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/avanti-ceo-caitlin-long-criticises-fed-stance-on-cryptocurrency-firms\/","title":{"rendered":"Avanti CEO Caitlin Long criticises Fed stance on cryptocurrency firms"},"content":{"rendered":"<p>The U.S. Federal Reserve (Fed) will make it harder for digital asset\u2013related companies to access the payments system and bank accounts, according to Caitlin Long, founder and CEO of Avanti, a cryptocurrency bank.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;It looks like the crackdown has begun. I don&#8217;t know how it will end, but it will not directly affect Bitcoin, Ethereum and other cryptocurrencies\u2014the base networks will keep producing blocks. It will affect intermediaries and access points to the U.S. dollar,&#8221; Long wrote.<\/p>\n<\/blockquote>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">1\/ THREAD ABT REGULATORY NEWS in <a href=\"https:\/\/twitter.com\/hashtag\/crypto?src=hash&#038;ref_src=twsrc%5Etfw\">#crypto<\/a>, which I\u2019ve been chronicling on twitter since April. Seems crackdown has begun. I dunno how it\u2019ll turn out but:<br \/>* it won\u2019t impact <a href=\"https:\/\/twitter.com\/hashtag\/BTC?src=hash&#038;ref_src=twsrc%5Etfw\">#BTC<\/a> <a href=\"https:\/\/twitter.com\/hashtag\/ETH?src=hash&#038;ref_src=twsrc%5Etfw\">#ETH<\/a> etc directly. Base layers will keep addin\u2019 blocks<br \/>* it\u2019ll impact intermediaries &#038; US$ access points<\/p>\n<p>\u2014 Caitlin Long \ud83d\udd11 (@CaitlinLong_) <a href=\"https:\/\/twitter.com\/CaitlinLong_\/status\/1414752483222736901?ref_src=twsrc%5Etfw\">July 13, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>In her words, on July 13 a landmark industry event occurred\u2014the public-comment period on the Fed&#8217;s proposed supervisory principles for assessing requests for access to banking accounts and the payments system has closed.<\/p>\n<p>The guidance responds to the growing number of fintech firms seeking to use central-bank services. The document does not mention the cryptocurrency market, but Long believes the changes will also affect it.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;Why does direct access to the Fed&#8217;s payment system matter? Let\u2019s go back to basics. Many industry startups were de-banked in autumn 2017 when banks broadly blocked accounts tied to crypto. Didn\u2019t matter whether biz was legit or scam\u2014all were de-banked&#8221;<\/p>\n<p>\u2014 Caitlin Long \ud83d\udd11 (@CaitlinLong_) <a href=\"https:\/\/twitter.com\/CaitlinLong_\/status\/1414752492269801476?ref_src=twsrc%5Etfw\">July 13, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>The risk of being cut off from the banking system was mentioned by the Bitcoin exchange Coinbase in its application for a direct listing of its shares.<\/p>\n<p>The founder of Avanti added that for many startups, having strong ties with banks was a \u201cdecisive factor.\u201d She also noted that the digital-asset industry would have fared far worse if institutions like Silvergate and Signature had left the market.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;Our industry is growing rapidly\u2014it needs many deposit channels. For our sector it is important that law-abiding companies can directly access U.S. dollars themselves. It\u2019s not just about eliminating multi-tier fees [&#8230;]. It\u2019s about consciously preserving our own banking access, not subject to the whim of some faceless manager,&#8221; she stressed.<\/p>\n<\/blockquote>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">9\/ It\u2019s also abt being responsible to keep our own banking access, not being at whim of a faceless manager somewhere. While most fintechs don\u2019t need to worry abt being de-banked, memories of 2017 still cause EVERY <a href=\"https:\/\/twitter.com\/hashtag\/crypto?src=hash&#038;ref_src=twsrc%5Etfw\">#crypto<\/a> co to diversify w\/ multiple bank relationships,even today.<\/p>\n<p>\u2014 Caitlin Long \ud83d\udd11 (@CaitlinLong_) <a href=\"https:\/\/twitter.com\/CaitlinLong_\/status\/1414752499899187203?ref_src=twsrc%5Etfw\">July 13, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>Long said that one of the industry&#8217;s current problems is the &#8220;forced separation&#8221; of banking and cryptocurrency services. Such a state of affairs creates risks for both sectors.<\/p>\n<p>In <a href=\"https:\/\/avantibank.com\/press\/avanti-submits-comments-to-federal-reserve\">comments<\/a> on the Fed&#8217;s proposal, Avanti outlined its position on these threats in detail. In particular, the crypto bank noted that providing access to the payments system to crypto companies carries fewer risks than permitting banks to hold digital assets.<\/p>\n<p>Avanti believes the Fed could mitigate the threats by promptly adopting the supervisory principles and approving \u201cqualified applicants,\u201d including from the cryptocurrency space.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;Please understand that the Fed&#8217;s primary job is protecting payment systems from losses, not monetary policy,&#8221; Long noted.<\/p>\n<\/blockquote>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">12\/ If you read it, pls understand Fed\u2019s #1 job isn\u2019t monetary policy\u2014it\u2019s protecting pymt systems against loss. Hence the focus of our letter. It\u2019s also a key reason why <a href=\"https:\/\/twitter.com\/hashtag\/Wyoming?src=hash&#038;ref_src=twsrc%5Etfw\">#Wyoming<\/a> <a href=\"https:\/\/twitter.com\/hashtag\/SPDI?src=hash&#038;ref_src=twsrc%5Etfw\">#SPDI<\/a> banks are structured as they are\u2014to minimize pymt system risk for banks that handle <a href=\"https:\/\/twitter.com\/hashtag\/crypto?src=hash&#038;ref_src=twsrc%5Etfw\">#crypto<\/a>.<\/p>\n<p>\u2014 Caitlin Long \ud83d\udd11 (@CaitlinLong_) <a href=\"https:\/\/twitter.com\/CaitlinLong_\/status\/1414752506131980288?ref_src=twsrc%5Etfw\">July 13, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>In Long\u2019s view, banks want the Fed to block access to its services for everyone not in their club. Fintechs seek to hook into the payments system without the costs associated with a banking licence.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;No crypto company works directly with the Fed. Some have the right to their own accounts in American banks; all others must operate indirectly via offshore banks or through multi-layer arrangements between fintechs and banks,&#8221; Long added.<\/p>\n<\/blockquote>\n<p>According to her, this situation harms the Fed itself\u2014the regulator cannot control hidden risks to the payments system. Moreover, banks processing Bitcoin transactions face settlement risks.<\/p>\n<blockquote class=\"twitter-tweet\" data-conversation=\"none\">\n<p lang=\"en\" dir=\"ltr\">18\/ There are HUGE differences in settlement speed &#038; irreversibility btwn <a href=\"https:\/\/twitter.com\/hashtag\/crypto?src=hash&#038;ref_src=twsrc%5Etfw\">#crypto<\/a> &#038; US$, which creates bank run risk for banks handling crypto. The issue isn\u2019t <a href=\"https:\/\/twitter.com\/hashtag\/Bitcoin?src=hash&#038;ref_src=twsrc%5Etfw\">#Bitcoin<\/a>, <a href=\"https:\/\/twitter.com\/hashtag\/Ethereum?src=hash&#038;ref_src=twsrc%5Etfw\">#Ethereum<\/a> or other crypto protocols\u2014they\u2019re just fine.\ud83d\udcaaThe risk comes from the banks\u2019 operational processes.<\/p>\n<p>\u2014 Caitlin Long \ud83d\udd11 (@CaitlinLong_) <a href=\"https:\/\/twitter.com\/CaitlinLong_\/status\/1414752519327297539?ref_src=twsrc%5Etfw\">July 13, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>In November 2020, the Wyoming State Banking Board <a href=\"https:\/\/forklog.com\/en\/news\/crypto-startup-avanti-caitlin-longs-venture-gains-u-s-bank-status\">unanimously approved Avanti&#8217;s charter and business plan<\/a>, granting it status as an official financial institution.<\/p>\n<p>In March 2021, Fed Chair Jerome Powell stated that <a href=\"https:\/\/forklog.com\/en\/news\/fed-chair-jerome-powell-bitcoin-could-replace-gold-but-not-the-us-dollar\">Bitcoin could replace gold, but not the U.S. dollar<\/a>. In his words, crypto assets are not useless as stores of value and means of payment.<\/p>\n<p>In June, the U.S. central bank named the stablecoin Tether <a href=\"https:\/\/forklog.com\/en\/news\/the-fed-calls-the-tether-stablecoin-a-challenge-to-financial-stability\">&#8220;a challenge&#8221; to financial stability<\/a>.<\/p>\n<p>Later, Deputy Fed Vice President Randall Cowles noted that properly structured \u201cstablecoins\u201d <a href=\"https:\/\/forklog.com\/en\/news\/fed-vice-chair-urges-not-to-fear-stablecoins-and-questions-the-case-for-a-cbdc\">will deprive <span data-descr=\"central bank digital currency\" class=\"old_tooltip\">CBDC<\/span> development of any meaning<\/a>.<\/p>\n<p>Follow ForkLog\u2019s news on <a href=\"https:\/\/twitter.com\/ForkLog\" target=\"_blank\" rel=\"nofollow noopener\">Twitter<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The U.S. Federal Reserve will make it harder for digital asset\u2013related companies to access the payments system and bank accounts, according to Caitlin Long, founder and CEO of Avanti, a cryptocurrency bank.<\/p>\n","protected":false},"author":1,"featured_media":45993,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[2003,1229,1249,36,26],"class_list":["post-45992","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-avanti","tag-banks-and-fintech","tag-federal-reserve-system","tag-regulation","tag-usa"],"aioseo_notices":[],"amp_enabled":true,"views":"24","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/45992","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=45992"}],"version-history":[{"count":1,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/45992\/revisions"}],"predecessor-version":[{"id":45994,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/45992\/revisions\/45994"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/45993"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=45992"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=45992"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=45992"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}