Crypto industry leaders are criticizing regulators for their perceived inaction in preventing fraud and protecting consumers. Caitlin Long and Jesse Powell expressed their dissatisfaction with regulators, despite their efforts to act in good faith. Both criticized regulators for failing to protect consumers from fraud.
Long claimed that she had warned law enforcement about a crypto crime prior to a major firm’s collapse, causing customer losses. She also brought the possibility of bank runs at crypto-friendly banks to the attention of banking regulators, but they disregarded her warnings.
Powell recounted a similar experience, saying regulators overlooked “massive red flags and illegal activity” he had flagged for years. Regulators acknowledged the red flags Powell raised but cited the offshore firms’ complexity as the reason for their inaction. He highlighted this as an example of the regulatory system’s shortcomings.
Long and Powell expressed their dissatisfaction with their firms being labeled as fraudulent, despite their good-faith efforts. Custodia Bank faced criticism from various sources, such as the White House, Federal Reserve Board of Governors, Kansas City Fed, and Senator Dick Durbin, as Long disclosed.
The approach to crypto regulation needs rethinking. Long said that the U.S. needs to take a similar approach to crypto as President Franklin D. Roosevelt did with the mutual funds market in the 1930s, where he introduced regulations to weed out bad actors without killing the industry’s potential.
Critics have taken issue with the SEC’s “regulation by enforcement” strategy, which Long believes will drive risks underground. She urged regulators to engage with reputable members of the crypto industry to devise a regulatory framework that does not stifle the industry’s innovative potential.
Industry Leaders Call for a New Approach to Crypto Regulation
Industry leaders are calling for a new approach to crypto regulation that balances consumer protection with innovation. The SEC’s “regulation by enforcement” approach has come under criticism, with some arguing that it is driving crypto activity underground.
According to Caitlin Long, founder, and CEO of Custodia Bank, the U.S. needs to take a similar approach to crypto as President Franklin D. Roosevelt did with the mutual funds market in the 1930s. Long thinks that introducing regulations to eliminate bad actors while preserving the industry’s potential would be a beneficial step.
Furthermore, Jesse Powell, co-founder and CEO of Kraken, shares Long’s frustration with regulators. Powell claims that regulators ignored “massive red flags and illegal activity” that he pointed out for years.
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Long and Powell, two prominent figures in the industry, advocate for collaboration between the U.S. government and crypto experts. Their aim is to create regulations that promote innovation while preventing potential misuse.
Long claimed that the bureaucracy buried her warnings about the potential risks of bank runs. Regulators cited offshore firm complexity as a reason for inaction, Powell noted. The approach to crypto regulation needs rethinking, and it is essential to balance innovation with consumer protection.
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