Banks vs. Crypto: How Regulation Could End the Divide

Speaking on the sidelines of the World Economic Forum in Davos, White House crypto adviser David Sacks described a future where banks and crypto firms no longer operate in parallel worlds, but inside the same digital asset ecosystem.

Key Takeaways

• David Sacks says banks and crypto will merge into a single digital asset industry
• Stablecoin yield is the main issue blocking US market structure legislation
• Banks oppose yield now but may embrace it once they issue stablecoins
• Clear regulation is seen as the trigger for full bank entry into crypto 

In his view, the turning point hinges on Congress finally delivering a comprehensive market structure law. Once that framework is in place, Sacks believes banks will stop treating crypto as an external threat and instead absorb it into their core business.

Why stablecoin yield is the real roadblock

Rather than ideology or politics, Sacks framed the current legislative deadlock as a narrowly focused dispute. The main sticking point is whether stablecoins should be allowed to generate yield, an issue that has frozen progress on the CLARITY Act.

Banks fear that yield-bearing stablecoins could siphon deposits away from traditional accounts, undermining their funding base. Crypto firms argue the opposite: banning yield entrenches incumbents and blocks fair competition. Sacks said neither side can afford to win outright if the bill is to move forward.

Compromise before perfection

Drawing on earlier legislative battles, Sacks warned against waiting for a “perfect” bill. He pointed to past crypto laws that stumbled repeatedly before passing, arguing that momentum matters more than ideological purity.

From his perspective, crypto companies should accept short-term concessions if it means securing a clear rulebook. Once that happens, the balance of power shifts naturally as banks enter the space and begin competing on the same terms.

Banks may change their tune

One of Sacks’ more striking arguments is that resistance to yield may fade once banks themselves issue stablecoins. He suggested that opposition is largely theoretical – rooted in fear of disruption rather than long-term strategy.

If banks become active stablecoin issuers, he expects them to adopt features they currently oppose, including yield, simply to remain competitive in a digital-first financial system.

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Industry tension spills into public view

The fragile negotiations became more visible after Coinbase pulled its support for the CLARITY Act. CEO Brian Armstrong criticized the draft for limiting stablecoin rewards while protecting banks from meaningful competition.

Despite the setback, Sacks framed the move as part of a broader bargaining phase rather than a collapse of talks. With no final agreement in place, he sees room for banks and crypto firms to return to the table and reshape the bill.

One industry, not two

Looking beyond the current standoff, Sacks’ message was clear: separation is temporary. In his forecast, banks, stablecoins, exchanges, and blockchain platforms eventually operate under a single regulatory umbrella, forming what he calls one unified digital asset industry.

The question, he suggested, is not whether that convergence happens – but how quickly lawmakers can clear the path.



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