There was a bigger story behind the battle over stablecoin rewards in the CLARITY Act: a fight over who will control the underlying infrastructure of digital finance as tokenization moves rapidly from experiment to broad adoption.

Tokenization is forcing a battle over whether this new financial system will be built primarily on private networks controlled by financial institutions, with central banks and regulators at the center, or on public networks, similar to the internet, that no financial institution owns and that anyone can build on.

Many people don’t realize how systematic this battle between old and new has been, or how long it has been underway.

As far back as 2021, the @baselcommittee effectively required banks to hold capital equal to 100% of their exposure to cryptoassets like BTC. That rule wasn’t designed to benefit banks - banks and their regulators frequently have competing interests - but its effect was to create a regulatory wall between the banking system and assets operating on open networks.

Then, in 2024, the @BIS_org joined with seven central banks and dozens of the world’s largest banks and other financial institutions in Project Agorá to build an alternative tokenized payments system around commercial bank deposits and central bank money - essentially recreating the existing banking architecture on new technology rather than moving payments onto open networks.

The common thread isn’t that banks and their regulators always agree. They don’t. And banks themselves increasingly experiment with public networks. But the core economics of banking - and the regulatory perimeter within which those economics operate - remain rooted in an institutionally controlled system. Banks and their regulators may have different interests within that system, but both have powerful reasons to resist financial activity migrating outside it to public networks that no institution controls.

The stablecoin rewards fight was another chapter in this larger battle.

Big banks sought restrictions on rewards that would make stablecoins less attractive as an alternative payments infrastructure. They activated community banks with warnings that rewards would cause massive deposit flight, despite never producing evidence for that claim.

But the banking campaign was much bigger than rewards. The banks worked to peel away support for CLARITY among lawmakers in both parties, contributing to delays and ultimately the death of legislation that would have provided statutory protection for developers and decentralized financial applications operating outside bank-controlled payment rails.

The Trump administration has embraced a very different approach to tokenization, competition and disruptive technologies.

From its first days, the Trump Administration made it explicit U.S. policy to protect Americans’ ability to use open public blockchain networks, develop and deploy software, transact peer-to-peer and maintain self-custody - and to support innovation on permissionless blockchains.

The President’s Digital Assets Working Group went further, calling on policymakers to embrace DeFi and describing the movement behind crypto as one dedicated to building a more open and efficient financial system.
The administration has been putting that commitment into practice, using regulatory authority to enable more financial activity to move onchain and reducing regulatory barriers to the development of decentralized financial infrastructure.

These regulatory steps don’t replace legislation. But the Trump administration deserves enormous credit for understanding what is ultimately at stake: not simply whether finance becomes tokenized, but what kind of financial architecture America will build.

Finance will be tokenized. The question is what we tokenize onto: open infrastructure that anyone can build on, or a digital version of today’s system controlled by the institutions that dominate it.

That is the fight.