Caitlin Long lashes out at New York Times over crypto “scare” article

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Avanti Bank and Trust CEO Caitlin Long published a rebuttal to a recent New York Times article claiming that crypto and decentralized finance are disrupting the banking industry so fast that regulators can’t keep up.

Disrupting traditional finance is exactly what crypto and DeFi aspire to do, but the article titled Cryptos Rapid Move Into Banking Elicits Alarm in Washington published on September 5 contained a number of inaccuracies and omissions according to Long.

The main argument of the article using startup DeFi BlockFi as an example was that crypto derivatives and highly leveraged products have become a nightmare for regulators scrambling to catch up. High-stakes speculation leaves investors vulnerable to large losses, according to the NYT.

But Long said the problem was not black and white and suggested that anti-crypto forces are constantly trying to paint the entire industry with the same brush. Bad actors deserve to be exposed, but the article ignores the fact that there are companies that comply with the regulations, she added.

1 / @NYtimes’ story on # crypto / # banking deserves a thoughtful answer. The problem isn’t black and white: Anti-crypto forces are trying to paint us all with a broad brush. Bad actors deserve to be exposed, but the article ignores the fact that there are companies that comply with the regulations. https://t.co/IUYTctBGfV

– Caitlin Long (@CaitlinLong_) September 5, 2021

Long particularly took issue that the article did not mention that there were already fully regulated crypto banks, like his own Wyoming-based Avanti, which launched in October 2020.

She said Wyoming’s Special Banking Charter does not allow cryptocurrency deposits. Regulated banks can provide crypto custody services, she continued, but can only accept deposits in fiat currency.

The article misses this critical point, it is a firewall protecting the Fed’s payment system from exposure to anything other than $ [USD].

The article also pointed out that many crypto intermediaries have introduced some of the bad behavior of traditional finance, such as extreme leverage without requiring a capital cushion. These are fair criticisms, according to Long, who has previously cautioned against leverage, adding that very few crypto intermediaries, such as brokers or third parties acting between banking and blockchain, disclose information about their reserves.

Related: Bitcoin Isn’t an Asset Designed to Be Mined, Says Caitlin Long

Long said DeFi platforms in particular do a much better job of transparency than crypto intermediaries or traditional banks, which remains one of its best attributes. Banks settle their accounts once a day while the crypto settles within minutes, and for this reason, the CEO of Avanti Bank concluded:

Regulated banks that manage crypto need to be in a straitjacket. It is the only safe and healthy way to integrate crypto and traditional systems.

The fiercely anti-crypto US Senator Elizabeth Warren was still on the warpath this week when she called the entire cryptocurrency industry the new shadow bank, as reported on September 7. She expressed particular concerns about stable coins and their apparent lack of transparency regarding reserves.

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