Mr. Strong clashes with the Governor of the Bank of France — The forefront of cryptocurrency policy discussed at Davos

Coinbase CEO Brian Armstrong recently participated in a panel discussion at the World Economic Forum held in Davos, Switzerland, where he engaged in a heated debate with François Villeroy de Galhau, Governor of the Bank of France, highlighting the deep-rooted conflicts between the cryptocurrency industry and financial regulators. While Armstrong strongly advocates for accelerating crypto innovation and consumer protection, Governor de Galhau emphasizes the importance of financial system stability and democratic oversight, leaving the two positions at an impasse.

The panel also included Standard Chartered Bank CEO Bill Winters, Ripple CEO Brad Garlinghouse, and Euroclear CEO Valérie Urbain, with CNBC’s co-host Karen Tso moderating. Originally scheduled to discuss “Tokenization: The Future?”, the discussion ultimately evolved into a more fundamental policy debate surrounding cryptocurrencies.

Dispute Over Stablecoin Rewards — US Competitiveness vs. Financial Stability

A major focus of the debate was whether stablecoins should be allowed to pay interest to holders. Armstrong argued that interest-bearing stablecoins are essential for both consumer benefits and US competitiveness.

“First, they bring more funds to consumers. People should earn more from their assets,” Armstrong stated. From an international competitiveness perspective, he warned, “China has announced it will pay interest on its CBDC (Central Bank Digital Currency), and overseas stablecoins already exist. If US regulations prohibit reward payments on stablecoins, foreign competitors will thrive.”

In response, de Galhau expressed concern that private tokens with interest could pose systemic risks to the traditional banking system. Specifically regarding the digital euro, he clearly stated, “The answer is no. The public purpose is to maintain financial system stability,” maintaining the stance that central bank digital currencies should not compete on yields.

Meanwhile, Bill Winters of Standard Chartered Bank expressed support for the crypto industry, noting that without yields, tokens lose their appeal as a “store of value.” Garlinghouse of Ripple took a mediating stance, saying, “Competition is good, and a fair playing field is important,” but also cautiously added, “Ripple is not heavily involved in that fight.”

Bitcoin Standard Debate — Democratic Oversight vs. Decentralized Systems

As the discussion delved into the fundamental ideology of the crypto industry, the opposition intensified. Armstrong boldly proposed a transition to a “Bitcoin standard” as a hedge against fiat currency devaluation.

“We are witnessing the birth of a new monetary system called Bitcoin standard, rather than the gold standard,” Armstrong said.

De Galhau strongly opposed this, emphasizing the importance of democratic control over monetary policy. “Finance and currency are part of sovereignty. We live under democracy,” he stated, expressing opposition to a currency system lacking democratic legitimacy.

As the debate escalated, de Galhau made an incorrect statement about Bitcoin’s mechanism, saying, “Trust is guaranteed by the independence of the central bank. I trust an ‘independent central bank with democratic authority’ more than ‘private issuers of Bitcoin,’” which misrepresented Bitcoin’s fundamental nature.

Armstrong promptly corrected him, saying, “Bitcoin is a decentralized protocol, and in fact, there is no issuer. When we talk about independence, Bitcoin is even more independent. No country, company, or individual controls it,” highlighting that decentralization offers the highest level of independence.

De Galhau dismissed this, emphasizing that unregulated private cryptocurrencies could pose political threats. “Unregulated innovation can lead to serious trust issues. The initial threats are privatization of money and loss of sovereignty. When private currencies dominate, each jurisdiction risks dependence on foreign issuers,” he warned.

Legislative Trends — Industry Opposition to Bank Competition

The discussion also touched on US crypto-related legislation. When Tso asked Armstrong about Coinbase’s recent withdrawal of support for the CLARITY Act, he explained the reasons behind the retreat.

“US legislation is progressing smoothly regarding market structure. It’s not stagnant. We can say good negotiations are ongoing,” Armstrong said, asserting that the process is still in an active revision stage.

However, he clarified his true intent for withdrawing from last week’s session, stating, “We want to ensure that US crypto legislation does not prohibit competition,” criticizing the “Washington D.C. lobbying groups” of banks for trying to eliminate competitors by force, and firmly rejecting this.

Garlinghouse also agreed on the need for fairness, stating, “A fair competitive environment is reciprocal, and crypto companies should follow the same standards as banks, and banks should also adhere to the same standards as crypto companies,” emphasizing the importance of an equal competitive environment.

Outlook for Coexistence of Cryptocurrencies and Traditional Finance

Despite some friction, an unexpected consensus emerged toward the end of the discussion. Garlinghouse described the dialogue as “lively” but pointed out a key agreement: all participants agreed that innovation and regulation must ultimately coexist.

The discussions at Davos highlighted that a significant gap still exists between the crypto industry, traditional financial authorities, and policymakers. However, it also underscored the urgent need to build mutual understanding and a balanced regulatory framework. Statements from industry leaders like Armstrong symbolize that cryptocurrencies are no longer negligible and that we are entering an era where regulators will work collaboratively to shape the future financial system.