The banking sector has more to gain from the impasse in the US Digital Asset Market Clarity Act, a bill aimed at regulating digital assets, than the crypto industry, according to Christopher Giancarlo, former chairman of the country’s Commodity Futures Trading Commission (CFTC).
“The banks need this more than they need crypto,” Giancarlo told Scott Melker on Sunday’s Wolf Of All Streets podcast. “Their general counsel is telling their boards: You can’t invest billions of dollars to build these digital rails without regulatory certainty. Banks can’t afford regulatory uncertainty.”
The bill has been stalled since January, with crypto companies including Coinbase CEO Brian Armstrong opposing proposals from the Senate Banking Committee to ban crypto companies from paying rewards to stablecoin holders.
Stablecoins, tokens whose values are linked to an external benchmark such as the dollar, are at the heart of the blockchain-based payments infrastructure being debated in the legislation: banks see them as a key part of a new digital system that could move money faster and more efficiently, while crypto companies are already experimenting with their use in global payments.
Banks, however, fear that allowing stable rewards could trigger a flight of capital from their coffers and want a “level playing field,” as JPMorgan CEO Jamie Dimon put it. Trump administration officials also criticized banks for holding the legislation “hostage.”
Giancarlo warned that if banks resist this, crypto will continue to grow anyway, or even move overseas.
“If the banks resist now, it’s not going to go away. It’s just going to go to Europe. It’s going to go to Asia…and then the American banks will say, ‘Whoa.’ Our analog system, based on identity and messages, no longer works anywhere outside,” he said.
Giancarlo puts his chances of the bill passing at about 60-40. “We have a lot of issues to resolve before we get there,” he said, noting that both sides have already passed the March 1 deadline set by the White House.
