- John E. Deaton criticizes federal agency corruption, advocates for a five-year ban on regulatory ‘revolving door’ practices.
- Caitlin Long voices concerns over Fed’s inconsistent approvals after Custodia Bank’s master account application is denied.
John E. Deaton, a lawyer supporting XRP and a Senate candidate in Massachusetts, has publicly criticized what he describes as widespread corruption within U.S. federal agencies, including the Federal Reserve.
Deaton, who represented 75,000 XRP holders in the Ripple vs. SEC case, expressed these views on the social media platform X, labeling the current period as “THE CORRUPTION ERA.”
As I’ve said multiple times, we are living through a period of time history books will later describe as:
“THE CORRUPTION ERA”
The Federal Reserve is no different than any of the other compromised federal agencies. The revolving 🚪 existing within these agencies must be closed… https://t.co/tG7tL7kShe
— John E Deaton (@JohnEDeaton1) May 22, 2024
Deaton is concerned about the “revolving door” practice, where federal regulators leave their posts to take high-level positions within industries they previously regulated. He advocates for legislation to impose a five-year ban on such career transitions, aiming to curb conflicts of interest and influence within government agencies.
The discussion gained further momentum following remarks by Caitlin Long, the CEO of Custodia Bank, who shared her concerns on the social media platform X. Long’s objections came after the Federal Reserve rejected Custodia Bank’s application for a master account, yet granted approval to a comparable application from Numisma, a fintech bank based in Connecticut without FDIC insurance or federal oversight.
🤬I AM SPEECHLESS. Is this what it appears to be–special treatment by the Fed for another former insider, just weeks after the Fed's Inspector General "suspended" its investigation into the Fed's master account practices?
Read what the @federalreserve said about… https://t.co/6EzQeYK67Z
— Caitlin Long 🔑⚡️🟠 (@CaitlinLong_) May 22, 2024
The decision came soon after a federal judge turned down Custodia Bank’s application, and shortly after the halt of an investigation by the Inspector General into the Federal Reserve’s procedures for handling master accounts.
Long questioned the consistency and fairness of the Federal Reserve’s decisions, noting that a bank with a regulatory profile similar to Custodia’s had been approved under questionable circumstances, involving a former Federal Reserve governor.
Eleanor Terrett, a journalist at FOX Business, noted that Numisma, previously called Currency Reserve, was conditionally approved by the Federal Reserve to obtain a master account. This marks it as one of the rare instances where a bank not covered by FDIC insurance and not federally regulated has received such approval in recent times.
🚨SCOOP: Connecticut-based fintech bank Numisma (formerly named Currency Reserve) has received conditional approval for access to a Federal Reserve master account, making it the second non-FDIC-insured, non-federally regulated bank to receive one in recent years.
What’s…
— Eleanor Terrett (@EleanorTerrett) May 21, 2024
The approval of both this bank and another, each connected to ex-Federal Reserve officials, has prompted questions regarding the fairness of the Federal Reserve’s approval practices.
The refusal to grant Custodia Bank a master account poses a barrier to the cryptocurrency industry, which views such access as essential for more effective integration into the U.S. financial system.
Access to a Federal Reserve master account would enable crypto-focused banks to offer more streamlined and potentially cheaper banking services by directly connecting to the Federal Reserve’s payment systems.
These events have contributed to concerns about an initiative some refer to as “Operation Choke Point 2.0,” allegedly an effort by the current administration to restrict the cryptocurrency sector, illustrating ongoing regulatory challenges that impact the adoption of new financial technologies.
