Caitlin Long Blasts Fed for Favoring Big Banks in Crypto Rules

Long explained in an April 27 post on X that even though the Fed had recently canceled four previous crypto guidelines, it had left one key rule in place—a statement made with the Biden administration in January 2023.

This remaining rule stops banks from working directly with cryptocurrencies and from creating stablecoins on open, permissionless blockchains. Instead, it favors stablecoins made by large banks within private systems.

Did you know?

Want to get smarter & wealthier with crypto?

Subscribe - We publish new crypto explainer videos every week!

What is Ripple? Beginner-Friendly XRP Explainer (Animated)

SUBSCRIBE

ON YOUTUBE

According to Long, this policy gives traditional financial institutions a head start in launching their own stablecoins, while other players in the market have to wait for Congress to pass a stablecoin law. She pointed out that if new federal legislation is passed, it could overrule the Fed’s current approach. She added, "Congress should hurry up".

Long also said the Fed’s policy does not just affect stablecoins. It also limits banks from taking part directly in crypto markets. For example, banks cannot act as market-makers for cryptocurrencies like Bitcoin BTC $93,694.41 , Ethereum ETH $1,757.96 , or Solana SOL $146.50 .

Another issue she raised is about crypto custody services. Long explained that banks offering custody usually need to handle "gas fees" for blockchain transactions. However, under current Fed rules, banks are not allowed to pay these fees, which creates extra hurdles for them to provide proper services to crypto clients.

Recently, Paul Grewal, Coinbase's chief legal officer, sent two letters to Acting Director Jamieson Greer of the Office of Government Ethics (OGE) and to new SEC Chair Gary Gensler. What did the letters address? Read the full story.