One of the major topics of background discussion at the 2026 edition of the World Economic Forum meeting in Davos, Switzerland, has been the showdown between the crypto industry and traditional banks regarding lobbying efforts on the final version of the crypto market structure bill under review in the U.S. Senate, which is known as the CLARITY Act.
During an interview with CNBC in Davos on Tuesday, Brian Armstrong, who is the CEO of crypto exchange giant Coinbase, was asked about the current discussions and controversy going on with the crypto regulation bill. In his remarks, Armstrong claimed that he was working on behalf of his users to create a better regulatory environment, while also claiming that banking interests were trying to effectively ban competition from the likes of Coinbase and other members of the crypto industry.
“Their lobbying arms and their trade groups are coming in and trying to ban their competition,” said Armstrong. “And so to me, you shouldn’t be able to ban competition.”
Ironically, Armstrong also noted that Coinbase is working with five of the top 20 banks in the world to provide basic crypto infrastructure services. According to Armstrong, the commercial side of these banks sees crypto as an opportunity.
Just last week, Coinbase pulled its support of the CLARITY Act due to a variety of concerns associated with a draft version that had been reviewed by the crypto exchange’s lawyers. Shortly thereafter, the Senate Banking Committee markup for the bill was postponed. Armstrong went as far as to post on X, “We’d rather have no bill than a bad bill. Hopefully, we can all get to a better draft.”
In short, the CLARITY Act is intended to provide a final clarification on the rules of the game for anything and everything related to crypto.
The proposed legislation is part of President Trump’s series of promises made to the crypto industry before he was elected. At the time, Trump expressed a desire to make the U.S. the crypto capital of the world. Last year, progress was made towards this goal with the passage of the GENIUS Act, which provided regulatory clarity for stablecoin issuers in the U.S. Additionally, Trump signed several pro-crypto executive orders. According to a recent report, the Trump family fortune also increased by $1.4 billion through crypto alone over the past year.
With the CLARITY Act, the goal is to provide clarity for the entirety of the crypto market, going beyond stablecoins. For example, the bill includes clarifications on which types of crypto assets are commodities and which are traditional securities, which allows the CFTC and SEC to focus on their respective areas of regulatory concern separately. The bill is also likely to include various protections for non-custodial crypto developers who are simply writing code rather than operating financial services businesses, which is seen as a key priority among the cypherpunk-minded core userbase, especially following the prison sentences handed down to the developers behind privacy-focused bitcoin wallet Samourai Wallet.
The crypto industry was desperate for clarity around these sorts of matters during the Biden administration. However, Gary Gensler, who chaired the SEC during that time, has stated that this clarity did exist and that the industry simply did not like that basically all crypto assets other than bitcoin were considered unregistered securities.
A large number of enforcement actions were taken against the crypto industry, including Coinbase, by Gensler’s SEC; however, the vast majority of pending cases have been closed since Trump was inaugurated. Late last week, House Democrats sent a letter to the SEC with concerns regarding the lack of enforcement in crypto and accusations of a perceived pay-to-play environment.
As crypto has become more centralized and largely departed from its decentralized, cypherpunk origins, the sector has started to compete more directly with the traditional banking system and its associated fintech applications. Indeed, UBS CEO Sergio Ermotti told CNBC of the relationship between crypto and banking, “Anyhow, I’m, I do believe that blockchain and that kind of technology is the future for the traditional banking business. So you will see a convergence, I bet.”
This increasingly blurred line between crypto and traditional banks is why banking lobbyists have become concerned with some of the language in the CLARITY Act. After all, banks do not want the rules to be changed out from under them in a way that benefits their upstart crypto competitors.
Of course, the crypto lobby has become a political power player in its own right, handing out $133 million to various pro-crypto candidates during the 2024 election cycle. Coinbase spearheaded much of this activity by contributing roughly $50 million to the Fairshake super PAC and its affiliates and launching the Stand with Crypto Alliance in 2023.
Key areas where crypto and banks are starting to clash are stablecoins and tokenized stocks. While traditional financial institutions seem prepared for the age of stock tokenization, as indicated by the NYSE’s Monday announcement on this front, the stablecoin phenomenon has created concerns for banks who fear customers may abandon traditional deposits for stablecoins that could potentially offer more lucrative interest rates. While the GENIUS Act prevented stablecoin issuers from passing interest from their treasury reserves down to their users, the legislation did not explicitly prevent stablecoin affiliates, such as Coinbase via its relationship with USDC-issuer Circle, from paying interest. Banking lobbyists now want to see that perceived loophole fixed in the CLARITY Act.
This battle between crypto exchanges like Coinbase and traditional financial institutions has shown just how far crypto has strayed from its original philosophy of disrupting both central and commercial banks. Bitcoin purists are becoming a smaller percentage of the overall crypto userbase, much of which now interacts with the sort of centralized, regulated intermediaries this technology was initially intended to disrupt.
It’s unclear whether the CLARITY Act will still find its way through the Senate this year. Crypto-based prediction market Polymarket currently puts the odds at 40% on low trading volume, which is down from a high of 80% roughly one week ago.
Speaking at Davos on Wednesday, President Trump said, “Congress is working very hard on crypto market structure legislation—bitcoin, all of them—which I hope to sign very soon.”
