At Davos, where the World Economic Forum is being held, the Coinbase camp led by Armstrong is fiercely opposing the head of the Bank of France over Bitcoin standards and cryptocurrency regulations.

At the World Economic Forum in Davos, Switzerland, where the world’s elites gather, the future direction of new industries is decided. This time, a panel discussion on tokenization unexpectedly developed into a heated debate. Coinbase CEO Brian Armstrong and François Villeroy de Galhau, Governor of the Bank of France, engaged in a fierce exchange over the pros and cons of interest payments on stablecoins and the role of Bitcoin in the global financial system.

This debate was not merely an academic dialogue but highlighted a fundamental clash of values that could determine the future of global finance. It involved three complex themes: US dominance in cryptocurrencies, European financial stability, and the balance between regulation and innovation.

Clash over Stablecoin Interest: Competitiveness vs Financial Stability

The initial spark of the panel was the question of whether tokens pegged to fiat currencies should pay interest to holders. This seemingly technical issue revealed underlying fundamental challenges related to national economic competitiveness, consumer protection, and the security of the financial system.

Armstrong positioned interest-bearing stablecoins as an essential element for maintaining the US’s strategic advantage. His argument was built on two pillars: first, consumer-level profit pursuit, and second, securing a competitive edge among nations. “It is fundamentally correct that consumers should be able to earn more revenue. At the same time, China has already announced that it will pay interest on its own CBDC. If US-regulated stablecoins are prohibited from paying interest, overseas competing projects will gain an advantage,” Armstrong argued, presenting both market mechanisms and geopolitical competition as reasons.

On the other hand, Governor de Galhau emphasized potential threats to the entire financial system. His concern was that private-sector stablecoins offering interest could undermine the stability of traditional banking. From his position leading European financial policy, he explicitly stated that digital euro should not participate in interest rate competition. “Public purposes should be to maintain financial system stability,” he declared, taking a firm stance.

Tensions Surrounding the CLARITY Act and US Regulatory Environment

During the conference, another critical issue emerged: the political conflict within the US over the proposed cryptocurrency regulation bill, the CLARITY Act. Last week, Coinbase’s withdrawal of support for this important bill caused ripples within the industry.

When the moderator mentioned this withdrawal, Armstrong responded defensively. He justified their decision as “resistance against anti-competitive lobbying by banking interests.” His remarks evolved into an argument that US regulators should treat the crypto sector on equal footing with the traditional banking system. “The US legislative process is making healthy progress regarding market structure. This is not stagnation but a constructive negotiation phase,” Armstrong said, emphasizing that the discussion was ongoing.

However, underlying this phenomenon was a deeper industry divide. Ripple CEO Brad Garlinghouse offered a more harmonious approach. He stated, “Competition itself is healthy, and a fair playing field is important,” while also pointing out the need for “reciprocal fairness.” In other words, crypto companies should be subject to the same regulations as banks, and banks should also adhere to the same standards as crypto firms. This balanced proposal was not merely a compromise but suggested an ideal form of industry integration.

Bitcoin Standardization Debate: The Dilemma of Decentralization and Sovereignty

The most heated part of the panel discussion was about the nature and positioning of Bitcoin. Armstrong proposed shifting towards a “Bitcoin standard” as a hedge against the decline in fiat currency value. This system, reminiscent of the gold standard, would link currency value to a single asset—Bitcoin in this case.

De Galhau strongly opposed this idea. His argument was rooted in the classical economic doctrine that monetary policy is inseparable from national sovereignty. “Monetary policy and currency are part of sovereignty. In a democratic society, democratically elected institutions should decide monetary policy,” he stated. He also argued that the independence of central banks fosters market trust.

The debate then shifted into technical misunderstandings. De Galhau assumed Bitcoin was issued by private entities, but Armstrong corrected him immediately. “Bitcoin is a decentralized protocol with no issuer. No one can control it. In this sense, Bitcoin is even more independent than central banks with independence,” he explained.

De Galhau dismissed this claim, warning that unregulated private currencies could pose political threats, especially to emerging economies. His concern was the risk of dependence on foreign issuers and the re-emergence of the structural issues caused by the gold standard, including the loss of monetary sovereignty.

Consensus on Balancing Innovation and Regulation

Despite the heated debate, a common understanding was beginning to form. Bill Winters, CEO of Standard Chartered Bank, offered a pragmatic perspective aligned with the crypto industry. He pointed out that for tokens to serve as a store of value, interest is essential, and without it, their appeal would diminish significantly. This suggested that even within the banking sector, understanding of cryptocurrencies was deepening.

Ultimately, all panelists agreed that innovation and regulation must coexist moving forward. Garlinghouse of Ripple described this consensus as “an active discussion with a positive outlook.” Rather than resolving conflicts, this debate fostered mutual understanding.

This panel at the World Economic Forum clearly demonstrated that crypto industry leaders like Armstrong are not only pushing new technologies but are also contemplating the reconstruction of the global financial system itself. Issues such as stablecoins, Bitcoin, and regulatory frameworks, which may seem separate, are all facets of the same overarching challenge—maintaining US competitiveness in the global economy, balancing technological innovation with financial stability, and ensuring democratic oversight.