Former CFTC Chair Says Banks Need Clear Crypto Regulations

• Former CFTC chief says banks need crypto regulatory clarity more than the crypto industry.
• CLARITY Act stalls in Senate amid dispute over stablecoin rewards and banking rules.
• Giancarlo warns U.S. banks risk falling behind Europe and Asia in digital financial innovation.

Regulatory clarity surrounding digital assets may be more critical for the traditional banking sector than for cryptocurrency firms, according to former U.S. Commodity Futures Trading Commission (CFTC) Chairman Chris Giancarlo.

Speaking during an episode of The Wolf of All Streets podcast hosted by Scott Melker, Giancarlo said banks face structural constraints that make them far more dependent on clear legal frameworks before investing in crypto-related infrastructure.

Banks Seek Clear Rules Before Major Crypto Investment

Giancarlo explained that large financial institutions cannot commit major capital to digital asset infrastructure while regulatory rules remain uncertain. According to him, legal departments within banks are advising leadership teams to avoid large-scale investments in crypto technologies until lawmakers provide clearer regulatory direction.

He said banks must operate within strict compliance structures, making regulatory certainty a prerequisite for deploying major funding. Without clear guidelines, financial institutions risk legal and supervisory complications if they move aggressively into digital asset services.

Giancarlo added that the issue is less urgent for cryptocurrency companies, which have continued to develop products despite regulatory pressure in recent years. He pointed to ongoing innovation within the sector, even during the tenure of former Securities and Exchange Commission Chair Gary Gensler, suggesting that the crypto industry has already demonstrated its ability to build under uncertain regulatory conditions.

CLARITY Act Faces Legislative Deadlock

The ongoing policy debate centers on the CLARITY Act, a proposed U.S. crypto market structure bill intended to define regulatory responsibilities and establish rules for digital asset markets. The legislation has remained stalled in the Senate since January as lawmakers and industry participants disagree on key provisions.

One of the most contentious issues involves whether stablecoin issuers and crypto platforms should be permitted to offer yield or reward programs tied to stablecoin deposits. Coinbase CEO Brian Armstrong has publicly criticized proposals from the Senate Banking Committee that would prohibit such rewards.

Meanwhile, traditional financial institutions have raised concerns about potential deposit outflows if stablecoin reward programs are allowed. JPMorgan CEO Jamie Dimon previously stated that banks are seeking a “level playing field,” arguing that crypto companies offering deposit-like rewards should face comparable regulatory obligations.

The legislative discussions have also drawn political attention. President Donald Trump has criticized banks during the negotiations, saying financial institutions are “holding the CLARITY Act hostage.”

Giancarlo Warns of Global Competition in Digital Finance

Giancarlo also cautioned that delays in crypto adoption could have broader consequences for the U.S. banking system. He warned that if American banks hesitate while other jurisdictions move forward, financial innovation could shift to other regions.

According to him, countries in Europe and Asia are already advancing digital financial infrastructure. If the United States delays regulatory decisions, Giancarlo said digital payment systems and blockchain-based financial rails may develop elsewhere.

Related: Eric Trump Slams Banks’ Low Rates, Backs Stablecoin Yields