Ex-CFTC Chair Says Clarity Act Will Help Banks

A former top banking regulator says the cryptocurrency-focused Clarity Act will help the banking sector.

“The banks need this more than crypto,” Christopher Giancarlo, former chair of the U.S. Commodity Futures Trading Commission (CFTC), said in a Sunday (March 8) interview with the Wolf Of All Streets podcast.

“Their general counsels are telling their boards: You can’t invest billions of dollars to build these digital rails unless you’ve got regulatory certainty. Banks can’t afford regulatory uncertainty.”

His comments were flagged in a report Monday (March 9) from Coindesk, which noted the conflict surrounding the bill, which has been stalled since January.

On one side are the crypto companies, which object to proposals from the Senate Banking Committee to bar them from paying rewards to stablecoin holders. Banks argue that permitting stablecoin rewards could cause a deposit flight.

As covered here last week, a proposal from the White House would allow rewards in some cases, like peer-to-peer payments, but not on balances that sit unused. While cryptocurrency companies have largely accepted that idea, banks are still calling for stricter limits.

In a social media post last week, President Donald Trump said banks “need to make a good deal” with the crypto sector to allow the legislation to move forward. This came after the president met with Brian Armstrong, CEO of Coinbase.

Giancarlo warned that if banks persist in their stance, crypto will continue to flourish, just in places outside the U.S.

“If the banks resist this now, it’s not going to go away. It’s just going to go to Europe. It’s going to go to Asia … and then American banks will say, ‘Whoa.’ Our analog, identity-based, message-based system is no longer working anywhere outside,” he said.

Giancarlo put the “betting odds” of the bill passing at about 60-40, adding that there were still several issues to resolve.

Writing about the stablecoin space last week, PYMNTS pointed out that regulators and policymakers generally acknowledge the benefits of the tokens, such as faster and cheaper cross-border payments.

“The real opportunity isn’t about chasing the buzzwords, but it’s more about being disciplined, identifying where stablecoins truly outperform a so-called legacy payment system,” Bryce Jurss, vice president, head of Americas, digital assets at Nuvei, said in an interview with PYMNTS last summer.