The Financial System Battle Behind Crypto Legislation
Galaxy CEO Michael Novogratz recently provided deep insights into the fundamental reasons behind the stalled crypto market structure bill. While both parties agree on the general legislative direction, the real controversy lies in the systemic conflict between traditional banking and crypto innovation.
Stablecoins Disrupt Banking Core Interests
The banking industry now faces unprecedented challenges: financial institutions pay almost negligible interest (only 1-11 basis points) to depositors, while their funds deposited at the Federal Reserve earn 3.5-4% attractive returns. This interest spread model is being completely disrupted by the rise of stablecoins.
- Stablecoins offer higher liquidity returns
- Threaten traditional banks' low-cost funding pools
- Force financial institutions to rethink deposit pricing strategies
Interest Structure Reconstruction Sparks Intense Struggle
This legislative battle is essentially a struggle for revenue allocation rights in finance. If stablecoins gain market access permission, traditional banks will face two choices: endure deposit outflows or increase depositor returns. This fundamental transformation is causing deep adjustments in the entire financial system.