The crypto fan and former managing director of Morgan Stanley, Caitlin Long, launched Avanti Bank
The world of cryptocurrencies will continue to evolve, and the thought of having a bank that can hold crypto funds may not be that far away.
Caitlin Long, a blockchain pioneer and former Morgan Stanley executive in Wyoming, plans to found Avanti Bank, the first bank in the United States to offer this type of cryptocurrency custody service. In an interview she gave to Cointelegraph, Long goes into more detail about why trust companies can’t handle the task of being crypto custodians.
Long explains: “There is a reason why the big custodians for institutional investors in the securities markets are banks – two reasons actually – 1) In contrast to trust companies, banks have direct access to the Fed for liquidity reasons and 2) the treatment of bank insolvency is clear while the treatment of a trustworthy company in bankruptcy is unclear. “
Having a bank instead of trust also offers its customers a degree of certainty about their funds in the event of bankruptcy. “Banks have MUCH higher capital requirements than trusts,” added Long. Banks also have higher capital requirements and less risk. Long also concluded that there is currently no bank in the U.S. that can hold crypto. This means that the custodian banks of trust companies are currently the only alternative. However, trust companies cannot offer the risk mitigation benefits of direct access to the Fed. “
According to Long, it fills a current gap in the cryptocurrency industry, although there is no shortage of participants in the industry like itBit or Coinbase. Even a conventional bank in Liechtenstein offers digital custody. However, it is more difficult for large institutional players to keep trillions of dollars safe, and custodians need to demonstrate expertise and trustworthiness. Long describes the missing piece as “a regulated bank that can act as a bridge to the Fed for payments + custody for BIG institutional money.”