Wall Street veteran and the force behind Wyoming’s forthcoming ‘crypto bank’ Avanti, Caitlin Long, has urged crypto industry leaders to bolster transparency.
Wall Street veteran and blockchain pioneer Caitlin Long delivered a presentation during Virtual Blockchain Week urging the crypto sector to be wary of the large number of IOUs underpinning stablecoins and third-party custodied assets.
Cointelegraph spoke to Long to discuss her recommendations and concerns for the industry, why crypto users must retain control over their private keys, and why she believes Bitcoin (BTC) is a safe-haven asset despite the violent March crash.
Greater disclosure is needed to bolster confidence in crypto
Long said, “In the crypto sector there is really very little disclosure about how much indebtedness the various exchanges and custodians have provided,” urging the crypto community “not to recreate the same thing that happened in the traditional financial industry.”
Long emphasized that crypto users are unable to tell if the industry’s service providers are solvent, stating, “We don't know that they've taken on debt, but we don't know that they have it because nobody is disclosing anything.”
Long urges cryptocurrency exchanges and firms to publish proofs of reserves, stating that “the last time we actually saw some of the exchanges really doing proofs of reserves [was] in 2014.”
Alternatively, Long advocated for greater use of auditing firms, adding, “That’s the easiest way for the industry to prove that it actually does deserve our business and our trust.”
Too many IOUs underpin the crypto sector
Caitlin asserted that there is a concerning amount of ‘IOUs’ underpinning key segments of the crypto ecosystem.
She noted that, while analysts estimate that about 25% OF Bitcoin and Ether (ETH) are held in third-party custody and 75% are self-custodied, the entire stablecoin sector is built on the basis of IOUs, stating:
“Really, this industry is not as self-custodied as you might think when you pull back the hood.