The core of the Davos debate: Three battles over the future of cryptocurrency regulation

At the World Economic Forum in Davos, Switzerland, where the event was held, a fierce debate unfolded that went beyond simple technological discussions to focus on the future of the global financial order. The clash between Coinbase CEO Brian Armstrong and French Central Bank Governor François Villeroy de Galhau ultimately boiled down to one question: who will lead the future financial system—innovation and regulation, or national sovereignty?

There were also other important voices in this discussion. The panel, which included Standard Chartered CEO Bill Winters, Ripple CEO Brad Garlinghouse, and Euroclear CEO Valerie Urquhart, resembled a microcosm of the global financial industry. Notably, Brad Garlinghouse’s mediating stance suggested that a realistic alternative could exist between the two extreme positions.

Stablecoin Yield Debate: Consumer Benefits vs. Financial Stability

The first front of the debate was whether stablecoins should offer yields like deposit interest.

Armstrong’s position was clear. He raised the issue on two levels. First, from the consumer’s perspective. “People should be able to earn more returns on their assets. This is about putting more money into consumers’ pockets.” Second, from the perspective of international competitiveness. According to him, China has already announced that its central bank digital currency (CBDC) will pay interest, and foreign stablecoins are also offering yields. There was concern that if tokens under US regulation cannot provide such benefits, overseas competitors will thrive.

Villeroy de Galhau responded from a very different angle. His focus was on systemic stability. He firmly stated, “That is not the answer,” emphasizing that “the public purpose also includes maintaining the stability of the financial system.” He believed that profit competition among private-issued tokens could threaten financial stability.

Brad Garlinghouse took an interesting middle ground in this conflict. While maintaining the principle that “competition is good and a fair playing field is important,” he also distanced himself by saying, “Ripple does not have a significant stake in that fight.” Meanwhile, Bill Winters of Standard Chartered, who is deeply involved in the digital asset industry, supported the cryptocurrency camp. He pointed out that without yields, tokens lose their appeal as a store of value. “Tokens will serve as a means of exchange and a store of value. Without yields, they are much less attractive as a store of value.”

US Legislation and Bank Lobbying: Strategic Choices for the Crypto Industry

The second front shifted to US cryptocurrency regulation bills. The discussion around the CLARITY Act revealed tactical shifts within the crypto industry.

Armstrong clarified why Coinbase recently withdrew support for this bill. According to him, “We want to ensure that no US cryptocurrency legislation bans competition,” and he criticized Washington D.C.’s banking lobbying groups for “trying to tilt the scales and prohibit competition.” He made it clear that he could not accept this.

However, Garlinghouse proposed a more nuanced approach. While agreeing with the concept of a level playing field, he emphasized that it should be reciprocal. “Crypto companies should be subject to the same standards as banks, and banks should be subject to the same standards as crypto companies,” he argued. In other words, true fairness must be mutual. This was a perspective aimed at balancing the entire system, contrasting with Armstrong’s opposition logic.

Bitcoin Standard Debate: Sovereignty and Independence Clash

The third and most fundamental front was the debate over the concept of a Bitcoin standard.

Armstrong provocatively proposed transitioning to a “Bitcoin standard” as a hedge against the decline in paper currency value. “We are witnessing the birth of a new monetary system that can be called a Bitcoin standard, not the gold standard.”

Villeroy de Galhau immediately countered, emphasizing the need for democratic oversight. His stance was clear: “Monetary policy and currency are part of sovereignty, and we live in a democratic country.” He argued that the authority of central banks over monetary policy cannot be separated from democratic oversight.

The debate intensified when Villeroy de Galhau attempted to compare the trustworthiness of central banks with Bitcoin, misunderstanding Bitcoin’s nature, to which Armstrong quickly corrected. “Bitcoin is a decentralized protocol. In fact, there is no entity issuing it.” He further turned Villeroy’s argument about independence on its head: “In the sense that central banks are independent, Bitcoin is even more independent. No country, company, or individual controls it.”

However, Loire regarded this as a threat. He warned that “regulation-free innovation could lead to serious trust issues,” and argued that if stablecoins and tokenized private currencies are left unregulated, especially in emerging economies, they could pose political threats such as “privatization of money and loss of sovereignty.” There was concern about the risk of jurisdictions becoming dependent on overseas issuers.

Brad Garlinghouse’s Practical Compromise

Amid these three intense debates, Brad Garlinghouse played an interesting role. He described the discussion on X as “heated,” but also pointed out a rare positive signal.

All parties ultimately agreed on one point: the need to find ways for innovation and regulation to coexist. This was not merely a compromise but an acknowledgment of the future direction of the industry. Garlinghouse’s mediating stance—that fair competition must be mutual—offered a practical path between the two extreme positions.

Questions Posed to the Industry

This Davos discussion was not just an academic debate. It reflected real dilemmas faced by regulators worldwide. The issues of stablecoin yields, the direction of US crypto legislation, and the relationship between decentralized assets like Bitcoin and national sovereignty—all will shape the global financial ecosystem after 2026.

What is particularly notable is that no one side achieved a complete victory. Armstrong’s innovation-focused logic, Villeroy’s stability-centered reasoning, and Garlinghouse’s mutual fairness argument all had valid points. This debate at Davos ultimately demonstrated that the cryptocurrency industry is proposing a fundamental redesign of the financial system, and how traditional finance and regulators will adapt to this is a key challenge for 21st-century economics.