Davos: Armstrong and the Bank of France disagree on the profitability of stablecoins

A heated confrontation unfolded at the Davos forum between Brian Armstrong of Coinbase and French financier François Villeroy de Galhau. Armstrong defended the necessity of yield on stablecoins, while his opponent sees this as a threat to the financial system. This debate reflects a deep divide between innovation supporters in the crypto sphere and conservative regulators.

The Yield Dispute: Two Opposing Positions

Armstrong insisted that holders of tokens pegged to fiat currencies should receive rewards. His argument is simple: people have the right to earn on their own money. Additionally, countries that ban such earnings will be at a disadvantage in global competition. As an example, Armstrong cited China, which plans to ensure yield on the digital yuan.

According to Coinbase’s head, US-regulated stablecoins will have a significant advantage over their foreign counterparts if they are allowed to pay rewards. Otherwise, the competitive edge will shift to offshore platforms.

François Villeroy de Galhau took the opposite stance. The head of the Bank of France stated that income from stablecoin holdings poses a serious risk to the banking system and should be banned. In his view, even the digital euro planned by the European Union should not generate income for its holders.

Ideological Battle: Bitcoin and Sovereignty

The discussion expanded and moved to Bitcoin. Armstrong proposed a bold hypothesis: global financial systems will soon adopt a “Bitcoin standard” as a safeguard against the devaluation of traditional money. “We are witnessing the birth of a new monetary system — the Bitcoin standard replacing the gold standard,” said Coinbase’s CEO.

Villeroy de Galhau linked traditional money to the concept of national sovereignty. The official emphasized that monetary policy and fiat currencies are symbols of national independence. He believes that central banks in democratic countries are more trustworthy than private cryptocurrency issuers.

Armstrong countered, noting that Bitcoin, as a decentralized protocol with no single issuer, has greater independence than any central bank. No government, company, or individual has control over this system.

Regulatory Concerns: From Innovation to Political Risk

Villeroy de Galhau ignored the counterargument and introduced a new thesis: stablecoins and tokenized assets could pose serious political threats, especially in developing countries, if left without proper government oversight.

The head of the Bank of France warned: “Innovation without regulation can lead to serious trust issues. The main danger is privatization of the monetary system and loss of national sovereignty. If private money dominates, countries risk dependence on foreign financial issuers.”

Political Resonance: CLARITY Bill Stalls in the Senate

The discussion has direct political implications. The US Senate was considering the CLARITY bill, aimed at regulating cryptocurrencies. However, its review was suspended indefinitely shortly after Coinbase opposed restrictions on income from stablecoin holdings.

Armstrong used the Davos forum to explain his company’s position: Coinbase aims to ensure that US cryptocurrency legislation does not hinder competition between stablecoin issuers and traditional banks. This regulatory battle will shape the future of the crypto industry for years to come.