On Monday, the Wall Street Journal published a report which exposed a culture of rampant sexual harassment, misogyny and lewd behavior at the Federal Deposit Insurance Corp. (FDIC). This resonated with crypto executives who said they have previously encountered similar behavior in the finance sector.
Custodia Bank founder and CEO Caitlin Long tweeted that she had spoken at a US banking conference the year before where a comedian was so raunchy that women walked out in droves. She suggested that banking is still a boys club, and that the hostility to women in the crypto sector is either less extreme than, or endemic to, a broader and much longer-standing culture of sexism in American banking.
Long is currently involved in a lawsuit against the Federal Reserve, which has refused to issue her Custodia Bank a standard accreditation that would allow it to perform traditional bank functions. She alleges that the Fed is illegally attempting, under false pretenses, to prevent Custodia from operating, likely because the bank is amenable to crypto.
The FDIC scandal has also been used by crypto executives and analysts as an example of the assumption that the traditional banking system is more legitimate and trustworthy than the digital assets industry. Sam Callahan, a blockchain analyst, noted that the nation’s top banking regulator has a party culture rife with misconduct going back decades. Nic Carter added that these are the people that lecture banks about ‘safety and soundness’ risks of banking ordinary crypto businesses.
Some crypto leaders have questioned why the Journal article was published now and whether the story might benefit traditional banking entities. BitMEX co-founder Arthur Hayes asked if it was an attempt to paint the failure of the regional banks as the result of a badly behaved singular regulator rather than the result of a deliberate monetary policy choice of the Fed and US Treasury.
Tomorrow, FDIC leaders are set to testify before the U.S. Senate Banking Committee during a session that was likely to cover crypto and de-banking. Now, the hearing will be influenced by the stories of the FDIC’s toxic workplace culture. Nic Carter mused that there must be a reason why this was leaked now.
Edited by Ryan Ozawa.