'Tokenized dollars will obviate the ACH': Caitlin Long

Transcription:

Penny Crossman (00:11):
Hi, I'm Penny Crossman, a technology editor of American Banker. I'm here at the On Chain Executive Summit. I'm here with Caitlin Long, who is founder and CEO of Custodia Bank in Wyoming. Welcome, Caitlin.

Caitlin Long (00:23):
Thanks, Penny. Good to be back.

Penny Crossman (00:24):
So when you think about all the things that are happening in on chain finance, what are you most bullish about?

Caitlin Long (00:31):
I think that tokenized dollars will essentially obviate the ACH network in the next five to 10 years. It's just better technology, better, faster, cheaper, more transparent. And it's just literally the barriers to entry of the high switching costs that are stopping it from being implemented more widely today.

Penny Crossman (00:55):
And what are the biggest obstacles or challenges that you think traditional banks will face as they try to participate in this world?

Caitlin Long (01:04):
Well, it's mostly regulatory, but it's also the core and the governance around it, all the policies and procedures and banks knowing that unless they have specialized staff, that they don't have the expertise and therefore it's more risky. So all of those things just getting mired in the regulatory muck of not having the right risk appetite statement and risk assessment and the policies and procedures surrounding it. And then of course the compliance piece is a big one. It is specialized. There are specialized tools that are available, but you've got to have the right people. And so how do you acquire those services? Do you build it or do you rent it or do you buy it? Every bank will be asking that question I think in the next few years.

Penny Crossman (01:51):
And if you had to make one prediction about the future of digital assets and on - chain finance, besides the prediction you just gave about tokenized deposits, what would your second prediction be?

Caitlin Long (02:04):
I actually think that most demand deposits will be tokenized in the United States. We're heading in that direction. The fact that the SEC has green lit tokenized securities is a big tell because that means in order to get the benefit of tokenized securities, you've got to have the dollar leg be able to settle in tokenized form. And as a result, the rest of the payments world is going to be following. And the other piece of this is that the banks right now without tokenization technologies cannot play in agentic commerce. And I saw a tweet yesterday from Eric For. He's one of the original Bitcoiners who said, "Maybe in retrospect, it will become clear that crypto was built for the machines all along." And I think that's quite a profound statement.

Penny Crossman (02:49):
Very interesting. Thank you, Caitlin.

Caitlin Long (02:51):
Thank you.

Penny Crossman (02:51):
Thanks for watching.