World’s Largest Banks Admit Crypto Could End Traditional Banking

TLDR

• Coinbase CEO Brian Armstrong said a top executive at one of the world’s 10 largest banks called crypto their “number one priority” and an “existential” threat to traditional banking
• Armstrong attended the World Economic Forum in Davos where tokenization of assets and stablecoins were major discussion topics among financial leaders
• The Trump administration is pushing crypto-focused legislation like the CLARITY Act to provide regulatory framework for digital assets in the U.S.
• Congress is debating whether stablecoins should be allowed to pay yield, with banks wanting to protect traditional deposit systems
• AI agents are expected to increasingly use stablecoins for payments, bypassing conventional banking systems and identity checks

Coinbase CEO Brian Armstrong returned from the World Economic Forum in Davos with a clear message about how traditional finance now views cryptocurrency. A top executive at one of the world’s 10 largest banks told Armstrong that crypto is their “number one priority” and called it an “existential” issue for their business.

Armstrong shared these comments in a post on X following the weeklong event in Switzerland. He did not name the specific bank or executive who made the statement. The CEO said most financial leaders he met were actively seeking ways to enter the crypto space.

The shift marks a change from previous years when many traditional banks dismissed digital assets. Armstrong wrote that leaders weren’t just open to crypto but were “leaning into it as an opportunity.” This comes as global regulators work toward establishing clearer rules for digital assets.

For banks that rely on legacy payment systems, crypto presents both challenges and new business possibilities. Bank of America CEO previously stated that stablecoins could drain trillions in bank deposits. The threat of disintermediation grows as stablecoins and tokenized assets gain traction in the market.

Tokenization Takes Center Stage

Armstrong identified tokenization as one of the most discussed trends at Davos this year. The technology is expanding beyond stablecoins into equities, credit, and other financial products. He pointed to 4 billion “unbrokered” adults worldwide who lack access to quality investments.

Tokenization could help close this gap by providing direct access to financial products. Armstrong predicted “major progress” in this area during 2026. A global asset manager or fintech firm could potentially bypass traditional banks by offering direct access to tokenized securities or stablecoin-based transfers.

These systems could move value instantly without clearing delays or middlemen. This represents a core principle of cryptocurrency technology. The shift could fundamentally change how people access and use financial services.

The Trump administration is pushing for crypto-focused legislation including the CLARITY Act. This bill aims to provide a regulatory framework for digital assets. Armstrong described the current administration as “the most crypto-forward government in the world.”

The CEO stressed that clear rules are essential for keeping the U.S. competitive. Countries like China are investing heavily in stablecoin infrastructure. President Trump also discussed these themes during his speech at Davos.

Stablecoin Yield Debate

Congress is currently debating crypto market structure legislation with one contentious issue: whether stablecoins should pay yield. Banks want to protect their traditional hold over consumer deposits. Crypto industry players want to pass yield or “rewards” to stablecoin holders.

The debate goes beyond crypto to the core of the U.S. financial system. For decades, most consumer bank balances earned little or nothing for their owners. Banks take deposits and use them for lending and investing while keeping most returns.

Consumer expectations are changing with new technology providing alternatives. People increasingly expect balances to earn by default rather than as a special feature. This shift extends beyond crypto to tokenized cash, tokenized Treasuries, and onchain bank deposits.

Banks argue that if consumers earn yield directly, deposits will leave the banking system. They claim this could make mortgages more expensive and shrink small-business lending. However, allowing consumers to capture yield doesn’t eliminate the need for credit but changes how it’s funded and priced.

AI and Crypto Connection

Armstrong noted that AI and crypto were the two most-discussed technologies at Davos. While AI’s surge has taken attention from crypto in capital markets, Armstrong stressed the two are closely linked. AI agents will likely use stablecoins for payments by default.

These AI systems will bypass conventional identity checks and banking restrictions. Armstrong stated “the infra exists, and usage is rapidly growing.” This creates another pathway for crypto adoption outside traditional banking channels.

Armstrong’s Davos recap made clear that crypto is no longer viewed as a fringe experiment. For some of the world’s biggest financial players, it has become a strategic priority and possibly a matter of survival.

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