The banking industry has more to gain from the stalled 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).
“Banks need this more than cryptocurrencies,” Giancarlo told Scott Melker on Sunday’s Wolf Of All Streets podcast. “Their general counsels are telling their boards: You can’t invest billions of dollars to build these digital rails unless you have regulatory certainty. Banks can’t afford regulatory uncertainty.”
The bill has been stalled since January, with cryptocurrency companies, including Coinbase CEO Brian Armstrong, rejecting proposals from the Senate Banking Committee to ban cryptocurrency companies from paying rewards to stablecoin holders.
Stablecoins, tokens whose values are pegged to an external reference like the dollar, are central to the blockchain-based payments infrastructure being debated in legislation: Banks see them as a key component for a new digital system that could move money faster and more efficiently, while cryptocurrency companies are already experimenting with their use in global payments.
However, banks are concerned that allowing stablecoin 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 have also criticized banks for holding the legislation “hostage.”
Giancarlo warned that if banks resist this, cryptocurrencies will continue to grow anyway, and potentially move abroad.
“If the banks resist this now, it won’t go away. It will just go to Europe. It will 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 estimated his chances of the bill passing at about 60-40. “We have a lot of issues to resolve before we accomplish this,” he said, noting that both sides already missed the White House’s March 1 deadline.
