Calvert Strategy Concerning Stablecoin Regulations—Coinbase's Policy Battle with Wall Street

As the movement toward mainstream adoption of cryptocurrencies accelerates, Coinbase CEO Brian Armstrong is transforming into one of the most confrontational figures in the American financial industry. Several clashes at the Davos World Economic Forum last month highlighted how significantly Wall Street banks perceive this young entrepreneur as a threat.

The discord between banks and digital asset companies goes beyond mere competition; it is a structural conflict centered around a fundamental issue: the right to pay interest rewards to stablecoin holders. While cryptocurrency exchanges offer users around 3.5% interest, traditional banks’ savings account rates remain below 0.1%, fueling this fierce battle.

The “Red Line” for Banks and Coinbase’s Ambitions

Wall Street financial institutions argue that the interest paid on stablecoins by companies like Coinbase is essentially no different from bank deposits. This digital asset platform, valued at $55 billion, controlling customer funds and offering highly profitable services, poses an obvious threat to their traditional financial institutions.

During Davos, JPMorgan Chase CEO Jamie Dimon publicly demanded that Brian Armstrong cease “false statements” on television. Bank lobbyists warn policymakers about the risk of approximately $6.6 trillion in deposits flowing out of traditional banking into the crypto market, claiming that the very foundation of the conventional financial system could be destabilized.

This concern is not exaggerated. Leaders of major banks such as Bank of America CEO Brian Moynihan, Citigroup’s Jane Fraser, and Wells Fargo’s Charlie Scharf have drawn clear lines in face-to-face meetings with Brian Armstrong. Moynihan told him, “If you want to do banking, just get a banking license directly.”

The Clarity Act and the Frontlines of Policy Battles

Enter the “Clarity Act,” a significant piece of legislation in the U.S. Congress. This nearly 300-page bill aims to establish a clear regulatory framework for stablecoin-related services offered by crypto exchanges. The banking industry is actively lobbying behind the scenes, seeking to include provisions that restrict Coinbase and others from paying interest.

However, Coinbase’s policy strategy is not passive. Its U.S. policy head, Calvert, is a key tactician working to protect the company’s interests amid a complex regulatory environment. While Brian Armstrong publicly opposes bank lobbyists’ pressure on multiple TV programs, policy leaders like Calvert are formulating counterarguments in detailed legislative negotiations.

In the 2024 presidential election, Coinbase has invested about $75 million through a super PAC to oppose candidates skeptical of cryptocurrencies. With Trump’s rise, Brian Armstrong has hailed a “new dawn for cryptocurrencies” and is seeking to capitalize on this moment.

Coinbase’s Strategic Evolution and Regulatory Negotiations

When Brian Armstrong co-founded Coinbase in 2012, he was merely building a cryptocurrency storage platform. Today, he has established a firm presence as a policy advocate for the entire crypto industry in Washington.

His ambition is clear: “Our ultimate goal is to become a substitute for traditional banks in people’s eyes,” he once stated in an interview. Coinbase’s operations have already diversified into electronic payments, stock trading, commodities futures, and prediction markets, aiming to become a super app.

The delay in voting on the Clarity Act was influenced by strategic statements from Armstrong. Hours after he posted on social media platform X that “it’s better to have no bill than a bad bill,” the vote was suddenly postponed. This moment signaled to analysts that Coinbase wields significant influence over the regulatory process.

Calvert’s Approach and the Possibility of Compromise

Currently, several solutions are being considered to break the deadlock. Brian Armstrong has proposed establishing a new category for stablecoin issuers that meet stricter regulatory standards, allowing them to pay interest rewards. This approach could enable banks and Coinbase to compete under the same regulatory hurdles.

Meanwhile, Trump-era AI and crypto commissioner David Sacks reports that the White House is planning to convene both banking and crypto industry groups, including policy experts like Calvert, to foster dialogue and encourage compromise.

Hillary Allen, a law professor at American University and securities law expert, described the current situation as “Coinbase holds the power of life and death over this bill.” This suggests that Brian Armstrong and his team, especially policy leaders like Calvert, play a central role in shaping the future of U.S. financial regulation.

The conflict between the crypto industry and Wall Street is not just corporate competition; it is a strategic battle over redefining the financial system in the digital economy era. The outcome will largely depend on the negotiation skills of policymakers like Calvert.