Caitlin Long, co-founder, blockchain pioneer and Wall Street veteran of the Wyoming Blockchain Alliance, said that trust companies are not enough to serve institutional investors as cryptocurrency custodians.
Long explained that the main custodian of institutional investors in the securities market is banks. One reason is that, unlike a trust company, a bank can apply for liquidity directly to the Federal Reserve. The second is that the bankruptcy of a bank is clear, and the treatment of a trust company in bankruptcy is unclear. In addition, banks face much higher capital requirements than trusts, and higher capital requirements also reduce the risk of default. She noted that pensions, endowments, foundations, etc. need this level of financial security before entering the cryptocurrency space. Long concluded that currently there is no bank in the United States that can host cryptocurrencies, so this means that trust company custody is currently the only option, but trust companies cannot provide the risk reduction benefits of direct contact with the Federal Reserve. According to previous reports, Caitlin Long announced the establishment of Avanti Bank, focusing on providing regulated services for crypto assets.