Custodia Bank CEO Caitlin Long says a major showdown may be looming between the U.S. Treasury Department and the Federal Reserve — and crypto banking is right at the center of it.
"Right now, most mainstream banks won't do anything involving your crypto side of your portfolio," said Roundtable host Rob.
Long was quick to explain why: "That's Operation Choke Point 2.0," she said, blaming adverse SEC accounting guidance (SAB 121) for freezing out crypto. "That was designed to throw sand in the wheels of the crypto industry by keeping the banks out."
While she said the policy has already been addressed at agencies like the SEC, FDIC, and OCC, she called the Federal Reserve the "one big laggard" — and warned of a brewing fight. "I think there's a big fight that is setting up between Trump and Secretary of the Treasury Bessant versus the Federal Reserve over exactly this issue."
Long referenced a comment by Treasury Secretary Scott Bessant on the All-In podcast. "He said, 'We're going to leave the Fed alone regarding monetary policy, but the Fed has not done a good job... There are too many regulators,'" she recalled, noting Bessant's intention to "consolidate bank regulation and put it into politically accountable organizations."
That includes ideas like Trump's proposed Strategic Bitcoin Reserve, which would be housed at the Treasury — not the Fed. "The Fed isn't chartered to have a strategic reserve of a cryptocurrency," Long said, recalling Powell's reaction: "Please don't give it to us."
According to Long, this tension is nothing new. She described how the Fed and Treasury "have historically had frictions, even when they've been friendly with common staffers." But under Trump, the divide could deepen. "Some of the people being confirmed are very critical of the Fed," she added.
Long even hinted at a potential executive order from Trump that could require the Fed to grant long-denied access to banks like Custodia. "I don't know if that's true," she said, "but it all does jive with the breadcrumbs... a battle, if not a war, is coming."
