Custodia Bank CEO Warns Crypto Debanking Challenges to Persist Until 2026

Caitlin Long, the founder and CEO of Custodia Bank, has warned that the cryptocurrency industry in the United States may continue to face debanking challenges until January 2026. This prediction comes despite recent positive legislative developments aimed at supporting the crypto sector. Long's comments were made during an appearance on a daily show, where she highlighted the ongoing regulatory hurdles that the industry is navigating.

Long emphasized that the Federal Reserve, currently controlled by Democrats, remains a significant obstacle in the path of cryptocurrency regulation. She noted that the Fed's stance could lead to a major conflict, especially if other regulatory bodies like the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) overturn their anti-crypto guidance while the Fed does not. This regulatory divide could create a complex landscape for crypto firms seeking banking services.

The debanking efforts have had a tangible impact on Custodia Bank, which has been repeatedly targeted. Long revealed that these efforts have cost the firm months of work and several million dollars. The industry's frustration with alleged debanking reached a peak when a lawsuit spearheaded by a major crypto exchange in June 2024 led to the release of letters showing that US banking regulators had asked certain financial institutions to "pause" crypto banking activities. This revelation sparked industry outrage and highlighted the extent of the regulatory pressure on crypto firms.

The issue of debanking is not confined to the United States. In other regions, cryptocurrency firms also face significant operational challenges due to debanking. A blockchain regulatory expert noted that debanking remains a major issue for both small and large crypto firms. The expert's personal experience includes having accounts closed multiple times between 2017 and 2022, although 2024 was reported to be a better year operationally. This underscores the global nature of the debanking problem and the need for coordinated regulatory efforts to address it.

The US Office of the Comptroller of the Currency (OCC) recently eased its stance on how banks can engage with crypto, just hours after President Donald Trump vowed to end the prolonged crackdown on crypto firms' access to banking services. Trump's remarks were made during a summit, where he announced the end of Operation Chokepoint 2.0. However, despite these assurances, the industry continues to face significant hurdles. The debanking efforts have had a profound impact on the cryptocurrency industry, with at least 30 tech and crypto founders reportedly being "secretly debanked" during Operation Chokepoint 2.0. This ongoing issue underscores the need for clearer regulatory guidance and support for the cryptocurrency industry to ensure its continued growth and stability.