Caitlin Long: I want leverage to disappear from the crypto market

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The CEO of Custodia Bank believes that regulators should have long ago regulated the crypto industry and shut down capital-borrowing companies.

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Caitlin Long stated in an interview that back in 2018, regulators were required to crack down on scammers and approve honest crypto companies and products:

“They are [регулирующие органы] did not give good players the go-ahead, as was necessary. They also didn’t go after the bad guys like they should have.”

The head of Custodia Bank noted that Grayscale Bitcoin Trust (GBTC), one of the few crypto funds approved by the Securities and Exchange Commission (SEC), “brought huge capital to hedge funds, hurt the industry and destroyed its value.” According to Long, in this situation, due to the imbalance between supply and demand, the price of GBTC was much higher than the market price, as the fund attracted significant leverage.

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Retail investors bought shares of GBTC, but only until competing products were approved by the SEC. Once competition emerged, funds like GBTC began trading at a discount to their net asset value.

Caitlin Long commented on the Grayscale Bitcoin Trust’s decision to file a lawsuit against the SEC after the commission rejected Grayscale’s application to convert GBTC to an exchange-traded fund:

“My intuition is that there are people in the SEC who wish this never happened. Because it took them over six years to green-light a different, competing product. Grayscale has been making money alone in the market for a long time, and many investors have suffered from its actions, as has the entire industry.”

Long believes it would be good for the industry if leveraged companies disappear and the industry is rebuilt around a non-leveraged business model.

Although Long can’t pinpoint exactly what the SEC’s next move will be, she suggested that the market is driven by regulatory decisions. She cited the story of loan company Genesis Global Trading, which is suffering a nine-figure loss due to exposure to crypto-currency hedge fund Three Arrows Capital, which is now in danger of collapse.

Source: Bits

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