What’s the Big Idea Behind Avanti Bank?
Yesterday marked a significant milestone in the financial landscape when Caitlin Long announced the launch of Avanti Bank, aiming to become the first regulated bank in the U.S. offering crypto custody services. Long, a prominent advocate for digital assets, argues that existing crypto custodial solutions—primarily trust companies—simply don’t cut it for institutional investors. It’s both a question of regulations and a matter of necessary trust.
Why Banks Over Trust Companies?
In her exclusive interview with Cointelegraph, Long illustrated a crucial point: trust companies don’t have the same legal and operational standing as banks. Here’s why banks are the favored option:
- Direct Access to the Federal Reserve: Unlike trust companies, banks can tap into the Fed for liquidity. This is huge when uncertainties arise.
- Clear Bankruptcy Procedures: Banks have well-defined protocols during bankruptcy, leaving little room for confusion. Trust companies? Not so much.
These elements not only provide peace of mind but also ensure a more stable financial environment for large institutional players venturing into crypto.
The Importance of Financial Security
Long stated that entities like pensions, endowments, foundations, corporations, and sovereign wealth funds require robust financial security to confidently step into the crypto waters. She pointed out, “Banks face MUCH higher capital requirements than trusts.” This translates to a lower risk of default, a critical concern for those managing billions of dollars.
The Digital Custody Landscape
The digital custody arena is becoming crowded with both traditional giants like Fidelity and crypto-centric players such as Coinbase and Xapo. Remarkably, even Bank Frick from Liechtenstein has offered digital custody services. But if there’s anything we learn from the U.S. market, it’s that institutional investors are not enamored by trust companies. Long emphasizes that there’s currently no U.S. bank equipped to handle crypto custody.
Bridging the Element of Trust
Long concludes that the absence of a regulated bank capable of serving as a liaison to the Federal Reserve for crypto custody creates a gaping hole in the market. She envisions Avanti Bank as this bridge that can facilitate transparency, legal clarity, and financial strength—all critical components needed to gain the trust of institutional investors. The potential implications are staggering; if Avanti Bank succeeds, we might just see the crypto market explode in ways that even the wildest Bitcoin bulls have only dared to dream.
