Custodia Bank CEO Says Bad Participants And Regulators Caused The Crypto Crash
The crypto crash was predictable, Custodia Bank CEO Caitlin Long said on CoinDesk TV's "All About Bitcoin."
Cryptocurrencies have been with us since 2018, Long said, so regulators are still to blame for not cracking down on bad actors earlier and not approving good companies and products in the industry.
"The regulators didn't cover the good players the way they were supposed to be," Long said, "and they also didn't go after the bad guys the way they needed to."
Long said that Grayscale Bitcoin Trust (GBTC), one of the few funds approved by the Securities and Exchange Commission (SEC) for investors to access bitcoin through their brokerage accounts without having to buy, store or protect their BTC, ended up "raising a whole bunch of money and causing damage the industry and really destroyed the value." Grayscale is owned by Digital Currency Group, which also owns CoinDesk.
According to Long, in this situation, due to the imbalance between supply and demand, the price of GBTC was much higher than the market price of bitcoin, acting as a hedge fund that brought significant amounts of leverage. Retail investors used the service, but only until the Securities and Exchange Commission approved competing products. As soon as the competition crept up, closed-end funds such as GBTC reversed course and started trading at a discount to their net asset value.
On Friday, Grayscale filed a lawsuit against the Securities and Exchange Commission after the agency rejected Grayscale's application to convert GBTC into an exchange-traded fund.
"My gut tells me there are people at the Securities and Exchange Commission who would like this never to happen," Long said.
Although Long cannot pinpoint what the Securities and Exchange Commission's next move will be, she noted that market distortions are caused by regulatory decisions. She referred to the manufacturer of cryptocurrencies and a credit firm Genesis Global Trading as it faces nine-figure losses due to the impact of the crypto hedge fund Three Arrows Capital, which is now facing collapse. (Genesis is owned by Digital Currency Group.)
And while questions remain around companies that still use bitcoin, Long said it would be good for the industry to "find a good way to get rid of all this."
"I would prefer to see all this disappear," she said, and instead rebuild the industry based on a business model without borrowed money."
https://coin-signal.com/cryptonews/custodia-bank-ceo-says-bad-participants-and-regulators-caused-the-crypto-crash/
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