Custodia Bank CEO Criticizes FSOC for Claims on Crypto “Concentration Risk

• FSOC flags stablecoin risks, cites 70% market dominance and regulatory gaps.  
• Caitlin Long accuses FSOC of hypocrisy, highlights state-federal regulatory conflicts.  
• Operation Chokepoint 2.0 evidence fuels calls for crypto policy shifts under Trump administration.  

The U.S. banking regulators and the crypto industry, Caitlin Long, CEO of Custodia Bank, has publicly criticized the Financial Stability Oversight Council (FSOC) for its stance on the risks posed by stablecoins.

Long’s remarks shared on social media, bring fresh scrutiny to the FSOC’s recent report, which flagged stablecoins as a potential threat to financial stability due to their market concentration and lack of alignment with federal oversight frameworks.

The FSOC’s report underscored what it termed as “concentration risks” in the stablecoin market, emphasizing that one entity accounts for a dominant 70% share of the industry. It also criticized stablecoin issuers for operating outside federal prudential regulatory frameworks. 

Caitlin Long responded sharply to the FSOC’s claims, particularly focusing on what she described as hypocrisy in regulatory approaches. According to Long, the FSOC has contributed to the crypto industry’s challenges by enabling a regulatory environment that has led to the debanking of crypto firms. 

She argued that this environment has pushed many stablecoin issuers out of the U.S. market, further consolidating risks instead of mitigating them.

Long also took issue with the FSOC’s dismissal of state-level regulation of stablecoin issuers. While some states have created robust regulatory frameworks for digital assets, Long suggested that federal regulators have overlooked these efforts in favor of a more restrictive approach. 

Adding to the controversy, Coinbase recently released correspondence with the Federal Deposit Insurance Corporation (FDIC), providing evidence of what some in the industry have termed “Operation Chokepoint 2.0.”

These documents suggest coordinated actions to limit banking services for crypto firms, further validating claims of an anti-crypto agenda among regulators.

With Donald Trump’s return to the presidency, the crypto industry anticipates regulatory reforms. Trump’s appointment of Scott Bessent to lead the Treasury Department and David Sacks as the Crypto and AI Czar has fueled speculation about a more favorable policy landscape.

Pro-crypto lawyer John Deaton has urged the new administration to investigate Operation Chokepoint 2.0, though no official statement has been made to confirm such a probe.