US Crypto Banking Stagnates Post-Trump Return, Says Caitlin Long
Caitlin Long, a prominent figure in crypto, leads Custodia Bank, which has pushed for crypto-friendly banking. Trump’s return was expected to ease restrictions, but Long says nothing has changed.
This could mean banks are still hesitant to offer crypto services, impacting the sector’s growth. It’s a pivotal moment for crypto adoption in the US.
Watch for potential policy shifts in the coming months, as Trump’s administration might still influence regulations.
Caitlin Long, a well-known advocate for crypto-friendly banking regulations, has been at the forefront of pushing for changes through Custodia Bank, a digital asset bank seeking a Federal Reserve master account to facilitate its operations. Donald Trump’s return to office, following his re-election, was anticipated to bring a more permissive approach to cryptocurrencies, given his past statements supporting blockchain technology and the development of a US digital currency. During his first term (2017-2021), Trump did not take a strong anti-crypto stance, and some of his officials were supportive, contrasting with the Biden administration’s more regulatory approach, including SEC crackdowns on various crypto projects.
However, Long’s statement on March 2, 2025, suggests that from January 20, 2025, to the present, no significant changes have occurred in the US crypto banking landscape. This period, spanning about six weeks, indicates that the regulatory and operational environment for banks dealing with crypto remains the same as it was under Biden, with ongoing challenges like regulatory ambiguity and the lack of clear guidelines from the Federal Reserve and other banking regulators.
Implications of the Statement
Long’s assertion that “nothing has changed in US crypto banking since Trump returned” implies several key points:
- Regulatory Stagnation: Despite expectations, there have been no new executive orders, legislative pushes, or regulatory clarifications from the Trump administration to ease the banking sector’s engagement with crypto. This could be due to the time required for policy implementation or the independence of regulatory bodies like the Federal Reserve, which is not directly controlled by the President.
- Banking Caution: Banks continue to take a wait-and-see approach, refraining from expanding crypto offerings until clearer guidelines are provided. This caution is understandable given the potential legal and financial risks associated with crypto activities in an uncertain regulatory environment, as seen in recent years with banks like Silvergate and Signature Bank facing scrutiny.
- Custodia Bank’s Struggle: For Custodia Bank, this means its quest for a Fed master account, a critical step for operating as a full-reserve bank, remains unfulfilled. Long’s statement highlights that even with a potentially more supportive President, the regulatory hurdles persist, reflecting the Fed’s cautious stance towards crypto banking.
Driving Factors
Several factors likely contribute to this lack of change:
- Federal Reserve Independence: The Fed, led by Jerome Powell until potentially replaced, operates independently of direct presidential influence. Any policy shifts would require time, possibly through new appointments or regulatory reviews, which haven’t materialized yet in the six weeks since Trump’s return.
- Ongoing Regulatory Debates: The classification of crypto tokens as securities or commodities remains unresolved, with the SEC under acting Chair Mark Uyeda (appointed by Trump) still navigating this. This ambiguity keeps banks on the sidelines, as seen in the lack of new banking charters for crypto-focused institutions.
- Market Volatility: Recent events, like the Bybit hack on February 21, 2025, causing a $325 billion market wipeout, and Bitcoin ETF outflows of $420M on February 26, per Cointelegraph, have heightened risk aversion, reinforcing banks’ cautious approach.
Expert Insights and Market Reaction
Analysts like Nic Puckrin from Coin Bureau argue that Trump’s pro-crypto rhetoric, including mentions of a digital dollar, hasn’t translated into action yet, aligning with Long’s view. X posts from @CryptoEnthusiastX and
@DeFiWatcher reflect mixed sentiment, with some disappointed by the lack of change and others expecting future shifts. The unexpected angle here is how this stagnation contrasts with Trump’s campaign promises, potentially setting the stage for future policy battles.
Supporting Data
To organize the key metrics, here’s a table summarizing recent US crypto banking developments:
| Aspect | Status as of March 2, 2025 | Notes |
|---|---|---|
| Custodia Bank Fed Account | Pending | Long’s bank still awaits master account |
| Regulatory Clarity | Unchanged | No new guidelines from Fed or SEC |
| Bank Crypto Offerings | Limited | Few banks offer crypto custody or trading |
| Trump’s Crypto Stance | Pro-Crypto Rhetoric | No policy changes implemented yet |
This table, derived from the analysis, highlights the status quo Long refers to. https://x.com/Lutcheann