The Davos Fracture
How Jamie Dimon, Brian Armstrong and stablecoin yield exposed the real fight over America’s financial future
When Nelson Mandela addressed Davos in 1992, the meeting had a clear purpose. South Africa was transforming faster than its institutions could adapt, and global markets needed a way to price a future that had not taken shape yet. Davos functioned as a translation layer: Political legitimacy on one side, capital on the other. Mandela didn’t offer policy detail; he offered something more valuable in that moment—legibility.
It was a triumph. Not just for Mandela and South Africa, not even just for Davos. It was a victory for humanity. Since 1971, the forum has convened world leaders, and some of its most meaningful social contributions came from informal coordination: The early scaffolding of the G20, the launch of GAVI, and countless quiet agreements that nudged the world toward stability.
Disagreements were normal. They were even productive. However, they were almost always civil in nature. The underlying assumption was that progress required a shared table, shared norms and at least a shared respect for progress.
That era appears to have evaporated.
You are full of shit.
Apparently, this is how Jamie Dimon feels about Brian Armstrong as he uttered those very words to his face. At Davos. While Armstrong was having coffee with Tony Blair, the former UK Prime Minister.
This… is… not… normal.
The 2026 theme was A Spirit of Dialogue. The Dimon-Armstrong exchange didn’t exactly embody that spirit.
The Flashpoint: Stablecoin Yield
The immediate trigger is narrow but consequential: Stablecoin yield. It’s the latest front in the TradFi vs. Crypto war. Crypto platforms argue that users should be able to earn yield, yield that will almost certainly trump what banks are offering their own customers. Brian Moynihan, CEO of Bank of America, warned that almost $6.6 trillion in deposits could flee the banking system.
But stablecoin yield is a symptom. The root cause is deeper: TradFi and Crypto no longer share a vision for the future of American finance. As the Wall Street Journal aptly paraphrased the landscape: This is a fight over the architecture of the financial system itself.
TradFi’s worldview is built on guardrails, boundaries shaped by decades of fraud, crisis and reform. Securities laws emerged because dishonesty was rampant in the 1920s, when half of the newly issued securities were worthless (PDF). The CFTC was created in 1974 to centralize futures oversight. After a deregulatory detour in 2000, Congress tightened the screws again with Dodd-Frank ten years later.
None of this means that banks or other traditional finance players are inherently moral actors; far from it at times. The history of American finance is littered with scandals, misconduct and outright fraud–often perpetrated by the very institutions now warning about crypto’s excesses. The point isn’t that TradFi actors are moral paragons; it’s that the United States built an architecture capable of detecting, punishing and containing the bad behavior. Boundaries were tested, sometimes ignored, occasionally shattered, but they mostly held.
The symmetry cuts both ways. One narrative was that Bitcoin is primarily a money laundering tool, nothing more. Then, Joe Kernen (CNBC) offered an alternative narrative: that Bitcoin is used far less for money laundering than the U.S. dollar. When we stress-tested these competing narratives, we rejected both and found something more mundane: The levels were roughly comparable. In other words, neither side gets to claim moral high ground by default.
When it comes to trading, however, which is the most direct window to the consumer, crypto and prediction markets reject the boundaries America worked hard to build and maintain. Their worldview is simple: If something can be traded, it should be traded. Anything goes.
Josh Sterling, former CFTC official (who was also on the shortlist to run the CFTC), now counsel to Kalshi, captured this ethos perfectly:
I think everybody’s a professional trader that is in these markets. And I think a lot of these people trade a lot of things. And I’ll tell you why that’s true, because if you look at this industry — the industry of trading, I’ll call it — every company out there that I represent, even the ones that I don’t, are trying to build the everything app on their phone because that’s how people aged 25-to-35 view their portfolio.
They want to trade stocks, zero data expiry options, crypto, FX, events, horses. You name it, they want to trade it because they view that as their financial portfolio. So this isn’t your mom or your dad calling E.F. Hutton to trade stocks at $20 or whatever. This is people trading anything and everything that they can.
Michael Selig, now in charge of the CFTC, wasted no time undoing some of the work the CFTC had already proposed as guardrails (more on this in our next post).
One app. One “portfolio.” Stocks, crypto, events, sports gambling–all collapsed into the same interface.
In other words, investing, speculation and gambling collapse into one giant headache.
And here we go again. Scratch the surface of the Davos quarrel and you return to the same four words–the lexicon of our thesis:
Almost every major disagreement in law and finance is rooted in these four words: Investing, Speculation, Gambling and Gaming.
The Real Question Beneath the Noise
Strip everything else away and one question remains:
What is the government’s responsibility when people engage in financial nihilism?
If people want to speculate recklessly and gamble mindlessly, should the government facilitate that? Doesn’t the government, after all, represent these very people?
Kyla Scanlon argued (paywall) recently that the “Lambo now” narrative is misplaced. People are not necessarily speculating because they are greedy; they’re speculating because they’re hopeless. They believe the American Dream has failed them (Some of the banks did play their part in Americans coming to this conclusion). Or as Lex and Bianca, our LexBeyond hosts aptly pointed out in our latest podcast:
The S&P 500 promises you might be comfortable when you are 65, crypto promises you might be free next Tuesday.
Sure. But do people truly understand the risks they’re taking? Again Lex and Bianca:
It’s one thing for people to take risks, it’s another thing entirely for them not to know they are taking them.
That’s the core of the frustration from Dimon and other stewards of TradFi. Expanding the menu is one thing. Expanding the menu with items that are unsafe for consumption and failing to disclose that, is something else entirely.
The Real Debate
Democratization vs. paternalization. That’s the exact question Preet Bharara, and Andrew Ross Sorkin grappled with in a recent podcast.
We’ll be back tomorrow with our takes on that podcast, stay tuned!
