Davos, Switzerland — January 20, 2026
Coinbase CEO Brian Armstrong highlighted key differences between traditional banking and stablecoin operations during a live CNBC interview at the World Economic Forum in Davos on Tuesday.
Speaking on the topic of crypto’s evolving relationship with big banks, Armstrong explained that conventional banks rely on fractional reserve lending—a longstanding practice where institutions lend out customer deposits to generate profit through interest spreads.
“The banks are doing something very different, which is called fractional reserve lending,” Armstrong said. “They’re actually lending out customer deposits without their permission, essentially, to earn a spread.”
He noted that this model underpins much of the banking system but requires heavy regulatory oversight due to associated risks.
In contrast, Armstrong pointed to stablecoins, emphasizing their fully reserved structure. “Under [proposed legislation like the] GENIUS [Act], stablecoin issuers have to hold 100% reserves,” he stated. “It’s not fractional reserve—100% of the assets are in short-term U.S. Treasuries. It’s very low risk.”
The remarks come as Armstrong attends Davos to engage with global leaders and bank executives amid stalled U.S. crypto market structure legislation. Coinbase recently withdrew support for a Senate draft bill over concerns including restrictions on stablecoin yields, prompting efforts to find compromise on a level playing field for both traditional finance and crypto firms.
A clip of the interview quickly spread on social media platform X, where it sparked widespread discussion. Some users praised Armstrong for spotlighting transparency in crypto, while others described fractional reserve banking as a standard, well-established feature of the financial system rather than a revelation.
Armstrong’s appearance underscores ongoing debates over stablecoin regulation, tokenization, and competition between banks and digital asset platforms.
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