The stablecoin debate is no longer primarily about crypto. It is about banking power. And if the back-and-forth over the weekend between Coinbase and JPMorgan Chase is to be taken at face value, it might not even be much of a debate anymore, either.
Asked about the CLARITY Act on Friday (May 29), Jamie Dimon, speaking on Fox Business, said he is not happy with it — because it effectively allows digital asset companies to pay interest on deposits such as stablecoins without the protections that should be in place and without AML/BSA requirements.
“We’ll fight it. If we lose, we lose, and we’ll live. But it will be fought,” the JPMorgan CEO explained, along with offering a few other choice words the crypto sector’s political hardliners.
JPMorgan isn’t taking a stand alone. Traditional banking groups, community banks, federal regulators, lawmakers and some financial stability advocates are converging around a shared concern: that stablecoins could replicate core banking functions without being subject to equivalent obligations.
Bitcoin has slid amid growing uncertainty surrounding the bill’s prospects, reflecting investor concern that Washington’s crypto-friendly momentum may be slowing just as institutional adoption appeared ready to accelerate.
The digital asset industry, however, sees the situation in a different way.
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See more: Two Years Ago vs Today: Looking at Crypto Regulation in the US
Crypto Consensus Is Fracturing
The Independent Community Bankers of America (ICBA) has emerged as one of the clearest institutional opponents of crypto firms gaining deeper access to the banking system. At the end of last month (May 21), the ICBA sent a letter urging the Office of the Comptroller of the Currency (OCC) to rescind Coinbase’s conditional approval for a national trust bank charter.
The organization pointed specifically to New York Attorney General Letitia James’ lawsuit against Coinbase and Gemini, which alleges the companies operated what the complaint characterizes as an illegal gambling enterprise connected to crypto lending activities. The ICBA argued that those allegations warrant either rescinding or suspending Coinbase’s preliminary charter approval until the legal issues are resolved and regulators reevaluate the appropriateness of granting banking privileges.
Community banks view the issue through a particularly defensive lens. Unlike megabanks with diversified revenue streams, smaller banks remain heavily dependent on deposit relationships and payment infrastructure economics. Yield-bearing payment stablecoins as regulated by the U.S. GENIUS Act are perceived not merely as speculative crypto products but as direct competitors to core banking services.
Ironically, Sen. Elizabeth Warren, D-Mass., viewed as one of Wall Street’s fiercest critics, now finds herself broadly aligned with bank lobbying groups including the ICBA and the Bank Policy Institute on portions of crypto policy. While their motivations differ, both camps are effectively arguing that allowing stablecoin issuers or crypto platforms to operate quasi-bank functions without equivalent oversight introduces systemic risk.
Warren wrote, in a May 18 letter to the Comptroller of the Currency Jonathan Gould, that:
“You have approved at least nine national trust charters for crypto companies that intend to engage in activities that appear to go far beyond the narrow set of activities permitted by law. These companies are effectively crypto banks that want to evade the fundamental safeguards and obligations that come with being a bank. Your decision to facilitate this regulatory arbitrage not only conflicts with federal law, it also poses serious risks to consumers, the safety and soundness of the banking system, and the separation of banking and commerce.”
See also: A Stablecoin History Lesson: The Messy Origins of the Internet’s ‘Digital Dollar’
Crypto’s Counterargument
The PYMNTS Intelligence and Citi report “Chain Reaction: Regulatory Clarity as the Catalyst for Blockchain Adoption” found that blockchain’s next leap will be shaped by regulation. The CLARITY Act could be one of the biggest pieces of that leap.
To crypto advocates, the CLARITY Act as written represents not deregulation but overdue regulatory modernization. Industry leaders argue that the existing patchwork of federal and state oversight has created uncertainty that disadvantages U.S. firms while driving innovation offshore.
PYMNTS reported May 25 that the CLARITY Act passed a key markup vote May 14 but that the digital asset bill’s path forward to passage is far from guaranteed. At its core, the dispute between banks and crypto concerns whether digital financial infrastructure will remain concentrated within regulated incumbent institutions or migrate toward more open, software-driven networks.
In a recent letter defending national trust bank charters for crypto firms, The Digital Chamber, which describes itself as the world’s largest digital asset and blockchain trade association, argued that companies receiving approvals from the OCC underwent extensive review processes and satisfied applicable statutory and regulatory standards.
For firms like Coinbase, which have relied on stablecoin yield as a revenue driver, the change may be significant. Yield products have been a key differentiator, especially during periods of low trading volume, and removing that lever could compress margins and push platforms toward more diversified, utility-driven revenue streams.
Still, when the CEO of America’s largest bank publicly attacks crypto legislation while major banking organizations intensify lobbying efforts against charter approvals, it can be interpreted as powerful incumbents mobilizing along their own lines of interest.
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