Custodia Bank CEO Criticizes US Government’s Inaction on Crypto Debanking Under Trump

Custodia Bank CEO Caitlin Long has criticized the U.S. government’s failure to address crypto debanking since former President Donald Trump returned to office.

Speaking at ETHDenver on Feb. 28 , Long stated that despite the perception of a policy shift, federal banking agencies have not reversed any anti-crypto regulations.

“It is still presumed unsafe and unsound for a bank to touch a digital asset even in a de minimis amount,” Long said, emphasizing that no regulatory changes have been made regarding crypto banking.

She remains confident that adjustments will eventually happen but noted that Trump has yet to propose any reforms.

Call for Leadership Change at the FDIC

Long highlighted the need for a new Federal Deposit Insurance Corporation (FDIC) chair, arguing that under former chairman Martin Gruenberg, the FDIC had resisted technological change for over 15 years.

“This is why the banking system is so backwards in this country,” Long said, blaming Gruenberg’s leadership for the lack of innovation in financial services.

Gruenberg was replaced by Acting Chair Travis Hill on Jan. 20, but Long suggested that deeper structural changes are needed.

Gruenberg had been accused of playing a key role in ‘Operation Chokepoint 2.0’, an alleged federal initiative aimed at denying banking services to crypto businesses.

While banking regulators remain rigid, Long acknowledged the SEC’s recent shift in approach toward the crypto industry.

The SEC’s creation of a Crypto Task Force, led by Commissioner Hester Peirce just one day after Trump’s inauguration, signaled a new stance on digital assets.

Additionally, the SEC revoked the controversial Staff Accounting Bulletin 121 (SAB 121), which previously required financial institutions to classify crypto holdings as liabilities—an accounting rule that was widely criticized within the industry.

Long also urged lawmakers to pass long-awaited stablecoin regulations while ensuring stronger consumer protections.

She pointed out that many U.S. banks hold only 8 cents in cash for every $1 of demand deposits, making them vulnerable to bank runs.

“In the crypto industry, we’ve learned that business model does not work,” she said, referencing the collapse of Silvergate Bank.

To protect consumers, Long emphasized that stablecoin issuers should be required to hold cash reserves backing their liabilities, ensuring the industry’s long-term stability.

A Shifting Regulatory Landscape

It is worth noting that the political shift has already had an impact.

Throughout February, the U.S. Securities and Exchange Commission (SEC) dropped multiple enforcement actions against crypto firms, signaling a change in regulatory tone.

As reported, cryptocurrency enforcement in the United States may ease under the upcoming administration of Republican President-elect Donald Trump, with regulatory priorities expected to shift.

Speaking at a legal conference in New York, current and former senior government lawyers indicated that while financial fraud cases will still be pursued, the Justice Department’s focus will likely move toward immigration enforcement, a key campaign promise of Trump.