Caitlin Long criticises The New York Times for publishing a crypto ‘warning’ article.

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Caitlin Long, CEO of Avanti, a regulated crypto bank, believes that tarring the entire crypto business with the same brush is unfair.

Caitlin Long, CEO of Avanti Bank and Trust, has responded to a recent New York Times piece asserting that crypto and decentralised finance are “disrupting the banking industry” at such a rapid pace that regulators are unable to keep up.

Although crypto and DeFi seek to disrupt traditional finance, Long claims that the story headed “Crypto’s Rapid Move Into Banking Elicits Alarm in Washington” published on September 5 contained a number of falsehoods and omissions.

The main point of the post, which used the DeFi firm BlockFi as an example, was that crypto derivatives and highly leveraged products have become a nightmare for regulators who are trying to catch up. According to the New York Times, high-stakes speculation exposes investors to significant losses.

Long, on the other hand, argued that the situation is not black and white and that “anti-crypto forces” are continually attempting to paint the entire industry with the same brush. “Bad actors deserve to be called out, but the article fails to acknowledge the existence of regulatory-compliant firms,” she added.

Long takes particular issue with the article’s failure to note that fully regulated crypto banks already exist, such as her own Avanti, which started in October 2020 in Wyoming.

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She claimed that Wyoming’s special bank charter prohibits “cryptocurrency deposits.” She went on to clarify that while regulated banks can provide custody services for cryptocurrency, they cannot accept deposits in anything other than fiat currency.

“Article misses that critical point — it’s a firewall protecting Fed’s payment system from exposure to anything other than $ [USD].”

The article also mentioned that many crypto intermediaries have adopted parts of traditional finance’s “bad conduct,” such as high leverage, without having a capital buffer. These are valid complaints, according to Long, who has previously warned about leverage, and who adds that very few crypto middlemen, such as brokers or third parties acting between the bank and the blockchain, publish information about their reserves.

Long claimed that DeFi platforms, in particular, perform significantly better in terms of transparency than crypto middlemen or regular banks, which remains one of its strongest points. Banks settle their books once a day while crypto is settled in minutes, and for that reason, the Avanti Bank CEO concluded:

“Regulated banks that handle crypto need to be in a straightjacket. That’s the only safe & sound way to integrate the crypto & traditional systems.”

adamantly anti-crypto As reported on September 7, U.S. Senator Elizabeth Warren was again on the warpath this week when she called the entire bitcoin business the “new shadow bank.” She was particularly concerned about stablecoins and their seeming lack of reserve transparency.

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