The CEO of Avanti Bank commented on an article in the NYT, according to which cryptocurrencies and DeFi are undermining the banking industry, and regulators cannot cope with financial turmoil.
On Twitter, Caitlin Long statedthat the recently published New York Times article contains a number of inaccuracies and omissions, and requires comment from industry participants. According to the article, the US Federal Reserve and other government agencies are trying to cope with the financial turmoil caused by the impact of the cryptocurrency industry on banks and other financial services.
1/ @NYtimes story on #crypto/#banking deserves a thoughtful reply. Issue isn’t black & white: anti-crypto forces try to paint us all w/ a broad brush. Bad actors deserve to be called out, but the article ignores fact that regulatory-compliant firms exist. https://t.co/IUYTctBGfV
— Caitlin Long (@CaitlinLong_) September 5, 2021
The main thesis of the article was that derivatives for cryptocurrencies and highly leveraged products have become a big problem for regulators who are struggling to keep up with the development of the industry. Big speculation makes investors vulnerable to big losses, NYT says.
Long noted that things are not so simple and said that opponents of cryptocurrencies are constantly trying to “row all industry participants with the same brush.”
“Unfair projects deserve to be eliminated from the industry, but the article ignores the fact that there are companies operating in accordance with the regulations,” she added.
Long is particularly concerned that the article does not mention fully regulated crypto banks, such as her Wyoming-based Avanti, which was licensed in October 2020. She stated that Wyoming’s special banking license does not allow Avanti to accept cryptocurrency deposits. Regulated banks can provide custody services for cryptocurrencies, but cannot accept deposits in anything other than fiat currency.
“The article overlooks this important point – the firewall that protects the Fed’s payment system from the effects of anything other than the US dollar.”
NYT reporters also noted that many intermediaries in the cryptocurrency industry have implemented “bad” practices from traditional finance, such as overly large leverage that does not require capital buffers. According to Long, this criticism is true – she herself had previously warned about the dangers of such tools.
In conclusion, the CEO of Avanti stated that the DeFi platforms are much more transparent than the operations of cryptocurrency intermediaries or traditional banks.
“Certain restrictions should be imposed on regulated banks dealing with cryptocurrencies. This is the only safe and reliable way to integrate cryptocurrency and traditional systems. ”
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