Banks and Crypto Firms Collide Over Who Controls the Next Settlement Layer

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Tensions between JPMorgan Chase leadership and Coinbase underscore a deeper fight over custody, stablecoins, and the future plumbing of capital markets.

By CoinEpigraph Editorial Desk | February 5, 2026

At first glance, the moment reads like theater.

A hallway exchange. Raised voices. A pointed finger.

The kind of scene that makes headlines because it feels personal.

But when Jamie Dimon, chief executive of JPMorgan Chase, reportedly confronted Brian Armstrong of Coinbase during policy discussions around digital-asset legislation, the significance wasn’t emotional.

It was structural.

The Wall Street Journal’s characterization of Armstrong as “enemy number one” on Wall Street may be rhetorical, but it captures something real beneath the phrasing: the largest bank in the country and the largest crypto exchange are no longer operating in parallel systems.

They are contesting the same terrain.

And that terrain is not trading.

It is settlement.

The fight beneath the fight

Markets tend to focus on price. Institutions focus on pipes.

Who clears trades.
Who holds custody.
Who earns the spread between money in motion and money at rest.

For decades, banks owned those functions almost by default. Deposits sat on their balance sheets. Payments flowed through their networks. Settlement moved at the pace their infrastructure allowed.

Crypto’s promise was never simply appreciation. It was compression.

Compress time.
Compress intermediaries.
Compress cost.

If value can settle peer-to-peer, or through blockchain rails that finalize in minutes instead of days, entire layers of traditional intermediation thin out. Custody shifts. Clearing risk changes. Margins narrow.

What once required three institutions and a weekend can be executed by code.

That’s not an ideological threat. It’s an economic one.

And economic threats tend to provoke sharper reactions than philosophical disagreements.

Why legislation matters more than personalities

The reported exchange took place against the backdrop of negotiations around digital-asset legislation, including proposals often grouped under a “Clarity Act” banner. At issue are questions that sound technical but carry enormous consequence:

Who can custody customer assets?
Who can offer yield on stablecoin balances?
What qualifies as a security versus a commodity?
Which regulator oversees which activity?

To the public, these distinctions feel procedural. To institutions, they determine profit pools.

If exchanges are allowed to offer yield-like rewards on dollar-backed tokens, they begin to resemble banks. If they can custody assets directly at scale, they bypass traditional custodians. If settlement occurs onchain, clearinghouses lose their temporal advantage.

In other words, clear rules level the field.

And level fields invite competition.

Competition compresses spreads.

Spreads are what incumbents protect most aggressively.

So while headlines focus on a pointed finger, the deeper reality is simpler: policy defines who controls the rails, and whoever controls the rails controls the economics.

A familiar cycle in financial history

This pattern is not unique to crypto.

Electronic trading once threatened floor brokers.
ETFs unsettled mutual fund gatekeepers.
Online brokers undermined full-service wirehouses.

Each time, the language was similar. Too risky. Too unstable. Too lightly regulated.

And each time, adoption continued because the new system reduced friction.

Markets have a bias toward efficiency. Not elegance. Not tradition. Efficiency.

Crypto’s infrastructure—tokenized assets, faster settlement, self-custody options, programmable payments—simply pushes that bias further.

The resistance is almost mechanical.

When an innovation threatens to remove toll booths, the toll collectors lobby.

The institutional irony

There is a quiet contradiction running through the current moment.

Many large banks publicly criticize crypto’s risks and volatility. Yet privately, they are building parallel capabilities:

Custody desks.
Tokenization pilots.
Blockchain settlement tests.
Stablecoin experiments.

It’s the classic dual-track response.

Slow the disruptor through regulation while replicating the useful parts internally.

That strategy signals something important: the debate is no longer about whether digital assets belong in finance. It’s about who gets to own the infrastructure once they do.

If the technology were irrelevant, there would be no need to compete.

The very existence of tension is evidence of acceptance.

Coinbase as proxy

Coinbase’s role in this story is less about one company and more about what it represents.

It is a visible, regulated, publicly traded gateway into crypto markets. It sits directly between retail users and capital markets. It has scale, compliance teams, and political presence.

That makes it a natural proxy for the broader shift.

When incumbents push back against Coinbase, they are pushing back against the idea that settlement and custody might migrate outside traditional banking channels.

In that sense, labeling it “enemy number one” isn’t personal.

It’s positional.

Coinbase occupies territory banks once assumed was theirs by default.

Two systems, briefly overlapping

Right now, two financial systems coexist.

One is slow, centralized, and deeply regulated. It moves trillions daily and has decades of precedent.

The other is faster, programmable, and still defining its boundaries. It moves value differently and challenges where trust resides.

For a time, they can operate side by side.

Eventually, they begin to overlap.

When they do, friction becomes visible.

Not because anyone intends conflict, but because both systems are trying to solve the same problem: how money moves.

Only one set of rails can dominate that function long term.

The institutional read is straightforward

From a structural perspective, the reported confrontation is less a dramatic moment than a tell.

When executives argue openly about legislation, it usually means the stakes are no longer theoretical.

Digital assets have moved from the periphery into the core of capital markets planning.

They are no longer a novelty trade. They are an infrastructure question.

And infrastructure questions are where finance gets serious.

Personalities may drive headlines. Policy and plumbing determine outcomes.

History suggests the direction is predictable: lower friction, faster settlement, broader access.

Those forces behave like gravity.

They don’t announce themselves loudly. They simply pull the system toward efficiency over time.

So while a hallway exchange may capture attention for a day, the deeper story unfolds quietly.

Not in the argument.

In the rails being built underneath it.

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