#1516 Caitlin Long | Every Bank Wants A LOT Of Bitcoin

— Custodia Bank's regulatory journey: Caitlin Long detailed seven years of battling Federal Reserve and banking regulators to create a special-purpose depository institution charter in Wyoming, with intensified obstacles following the FTX collapse.

— Stablecoin regulation and the upcoming bill: A stablecoin bill is expected soon requiring dollar-for-dollar liquid reserves; debate centers on whether Tether will be subject to additional restrictions and whether only banks or also startups can issue stablecoins.

— Symbiotic relationship between Bitcoin and stablecoins: Tether currently settles a clear majority of Bitcoin trading volume; stablecoins are essential infrastructure for institutional adoption and prime brokerage settlement of digital assets.

— Lightning Network and digital dollars: Tether's planned deployment of US dollar stablecoins on the Lightning Network represents critical scaling infrastructure for machine-to-machine payments and future fintech.

— U.S. strategic Bitcoin reserve and CBDC prospects: Trump administration is anti-CBDC (favoring private sector innovation); a strategic reserve is likely limited to not selling seized Bitcoin rather than the government buying on open market.

— Banking system structural risk: Traditional fractional-reserve banking (keeping 8–12 cents per dollar of deposits) cannot safely support fast crypto settlement; ring-fenced, fully-reserved digital dollar subsidiaries are the safer regulatory path.

— Stablecoin regulation shapes institutional access: Banks will need digital dollar settlement capability within 6–9 months to compete in spot Bitcoin trading and prime brokerage; regulatory clarity on stablecoin issuance will determine which entities control this infrastructure and arbitrage spreads.

— Lightning Network as primary scaling layer: If Tether successfully deploys USDC on Lightning and other stablecoins follow, payment volume will shift away from on-chain settlement, favoring Lightning for both retail and institutional use.

— Wyoming's regulatory framework offers early advantage: Wyoming's digital asset property law and special-purpose depository institution charter create a first-mover advantage for firms like Custodia; other states and the federal government are now adopting similar regimes.