Regulators repeatedly raise concerns about whether crypto-assets can create financial stability risks for the economy as they become mainstream. Yesterday, the leaders of major ‘institutional crypto’ firms Custodia Bank, broker B2C2, and custody firms Fireblocks and Anchroage spoke about some of the settlement risks and legal uncertainties and how they might be addressed. They were talking at the Financial Times Crypto and Digital Assets Summit.
Former Morgan Stanley banker Caitlin Long said that “Bitcoin’s going to take a G-SIB (global systemically important bank) down at some point because they don’t understand that the settlement risk is so different between Bitcoin and traditional assets.” Long is the founder and CEO of Custodia Bank (formerly Avanti).
She was referring to how Bitcoin settles within minutes and transactions are irreversible. In contrast, sometimes cryptocurrency payments are made using fiat currency, and U.S. payments invariably clear the next day.
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