A new crypto bank could be coming to the US
Crypto fan and former Morgan Stanley managing director Caitlin Long is launching Avanti Bank
The cryptocurrency world will continue to evolve, and thinking of having a bank that can provide custody of crypto funds might not be that far away. Caitlin Long, a blockchain pioneer and former Morgan Stanley executive in Wyoming, is planning on launching Avanti Bank, the first bank in the US to offer this kind of cryptocurrency custody services. In an interview she granted to Cointelegraph, Long elaborates more about why trust companies can’t handle the task of being crypto custodians.
Long explains “There’s a reason why the big custodians for institutional investors in securities markets are banks – two reasons, actually – 1), unlike trust companies, banks have direct access to the Fed for liquidity purposes, and 2) the treatment of a bank in bankruptcy is clear, while the treatment of a trusted company in bankruptcy is unclear.”
Having a bank instead of trust also offers its clients a level of certainty about their funds in case bankruptcy is faced, “banks face MUCH higher capital requirements than trusts,” adds Long. Also, banks have higher capital requirements and lower risk. In addition, Long concluded that “There’s not a bank in the US that can custody crypto right now – so this means trust company custodians are the only alternative at present. But trust companies can’t offer the risk reduction benefits of direct access to the Fed.”
According to Long, she is filling a current void in the cryptocurrency industry, even though there is no lack of participants in the industry, such as itBit or Coinbase. Even a conventional bank, located in Liechtenstein, offers digital custody. But, for big institutional players, it is harder to keep trillions of dollars safe, and custodians need to demonstrate expertise and trustworthiness. The missing piece is referred to by Long as “a regulated bank that can act as a bridge to Fed for payments + custody crypto for BIG institutional money.”