Caitlin Long, CEO of Custodia and a prominent voice in the crypto world, has cast doubt on the big players of traditional finance and their readiness to navigate the tumultuous waters of a crypto bear market. Addressing attendees at the Wyoming Blockchain Symposium in 2025, Long pointed out a potential Achilles’ heel: Wall Street’s legacy systems might not be up to the task of managing the intricate dynamics of digital assets.
Wall Street’s Crypto Enthusiasm: A Double-Edged Sword?
Wall Street has been diving headfirst into the crypto pool, and their growing involvement has undeniably injected fresh vigor into the market. But here’s the catch—while their presence has been a boon, fueling the current market cycle with new capital and interest, it’s also raised some eyebrows. According to Long, the traditional risk models these institutions rely on could be their undoing in the volatile crypto sphere. As explored in our recent coverage of blockchain’s courtship with Wall Street, this enthusiasm is not without its challenges.
“The systems they have in place were built for a different era,” Long explained, highlighting the discrepancy between old-world finance and the fast-paced evolution of crypto. “They’re trying to apply traditional finance risk models to a market that doesn’t play by the same rules.”
Underestimating the Crypto Winter
Crypto winters—periods marked by steep declines and sluggish recoveries—are a known phenomenon for those in the digital currency space. However, for the uninitiated traditional financial institutions, these chilly periods could be quite the wake-up call. The concern is not just about potential financial losses but also about systemic risks that could ripple through the broader financial ecosystem. This is a sentiment echoed in our Asia Morning Briefing, where market observers have noted structural weaknesses in Bitcoin despite industry growth.
“Wall Street is used to dealing with stocks and bonds, not digital assets that can lose half their value in a matter of days,” noted a crypto analyst from Arcane Research. “There’s a learning curve, and the stakes are incredibly high.”
The current market scenario—characterized by volatile swings and regulatory uncertainty—puts immense pressure on these institutions to adapt swiftly. Yet, the big question remains: Can they?
The Need for Adaptation
Traditional finance firms are not blind to these challenges. Many are investing heavily in blockchain technology and recruiting crypto-savvy talent to bridge the knowledge gap. But it’s not just about having the right technology—it’s also about mindset. The crypto world is one where decentralization, rapid innovation, and community-driven projects are the norm, and this cultural shift can be a tough pill for traditionalists to swallow.
For instance, the rise of decentralized finance (DeFi) platforms like Uniswap and the increasing popularity of staking mechanisms on networks such as Ethereum are redefining financial interactions. These developments pose unique challenges and opportunities for traditional finance, which must adapt to stay relevant.
Looking Ahead
As the crypto landscape continues to evolve, so too must the strategies of those who wish to thrive within it. The integration of digital assets into mainstream finance is inevitable, but the path forward is fraught with uncertainty. Institutions must not only update their technological infrastructure but also shift their strategic paradigms to accommodate this new asset class.
Long’s comments serve as a stark reminder that while Wall Street’s entry into crypto brings legitimacy, it also requires a reevaluation of old practices. The road ahead is uncertain, and as the next crypto winter looms on the horizon, the ability of traditional finance to weather the storm is still an open question. Will they adapt and thrive, or will they falter under the weight of their legacy systems? Only time will tell.
Source
This article is based on: Custodia Chief Doubts TradFi’s Ability To Handle Crypto Bear Market – Details
Further Reading
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
