Stablecoin

Bitcoin

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US banks should give better rewards to attract and keep customers instead of griping about the threat that stablecoins pose to their profits, says Bitwise’s investment chief, Matt Hougan.
“If local banks are worried about competition from stablecoins, they should pay more interest on deposits,” Hougan <a href="https://x.com/Matt_Hougan/status/1965409717100175491" rel="noopener noreferrer nofollow" target="_blank">wrote</a> on X on Tuesday.&nbsp;
He added that the banks are only worried because “they’ve been abusing depositors as a free source of capital for decades.”
Hougan’s comments come as Citi claimed last month that yield-bearing stablecoins could <a href="https://cointelegraph.com/news/citi-executive-stablecoin-yields-drain-bank-deposits-report" rel="noopener noreferrer nofollow">spark a wave of bank withdrawals</a>, and as US banks have lobbied Congress to <a href="https://cointelegraph.com/news/us-bankers-want-stablecoin-yield-loophole-closed" rel="noopener noreferrer nofollow">tighten up</a> US stablecoin laws around paying yield.
<h2 id="hougan-slams-first-order-thinking">Hougan slams “first-order thinking”</h2>
Hougan said that “scare articles about stablecoins destroying local lending markets are absurd,” in response to a Bloomberg <a href="https://www.bloomberg.com/news/articles/2025-09-08/stablecoins-like-tether-usdc-have-small-banks-businesses-worried?taid=68bec65855530a000116bfd7&amp;utm_campaign=trueanthem&amp;utm_content=business&amp;utm_medium=social&amp;utm_source=twitter" rel="noopener noreferrer nofollow" target="_blank">report</a> on Monday discussing workers being paid in stablecoins and the possible effect on banks.
Bloomberg’s <a href="https://www.bloomberg.com/news/articles/2025-09-09/podcast-will-1-trillion-be-enough-to-get-musk-back-in-gear" rel="noopener noreferrer nofollow" target="_blank">report</a> said smaller community and regional banks face a new competitive threat from stablecoins because they depend on customer deposits for lending, unlike large banks that can access wholesale markets.
The report compared yield-bearing stablecoins to the emergence of money markets in the 1970s, which offered a higher-yield alternative to conventional savings accounts, resulting in a rush to withdraw funds from banks.
Hougan added that the speculation that credit would “dry up” if stablecoins were allowed to compete with banks was “classic first-order thinking.”
Hougan said banks may provide less credit if they have <a href="https://cointelegraph.com/news/citi-executive-stablecoin-yields-drain-bank-deposits-report" rel="noopener noreferrer nofollow">fewer deposits</a>, but people with stablecoins will provide credit directly to borrowers through decentralized finance applications.
<blockquote>
 “The loser here is bank profit margins. The winner here is individual savers. The economy will be just fine.”
</blockquote>
<h2 id="stablecoin-yields-outcompete-savings-accounts">Stablecoin yields outcompete savings accounts</h2>
Some stablecoins offer up to 5% on deposits on certain crypto platforms, a far more attractive rate than the US national average savings rate of just 0.6% and still above the best offered high-interest rate of 4%, <a href="https://www.bankrate.com/banking/savings/average-savings-interest-rates/" rel="noopener noreferrer nofollow" target="_blank">according</a> to Bankrate data.
Related: <a href="https://cointelegraph.com/news/yield-bearing-stablecoin-supply-surges-after-genius-act" rel="noopener noreferrer nofollow">Yield-bearing stablecoin supply surges after GENIUS Act</a>
When inflation and bank charges are considered, consumers often lose money by leaving cash sitting in a bank over time without a yield.
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 <img src="https://s3.cointelegraph.com/uploads/2025-09/0199322c-f37c-7e35-b560-5378cea26d07" title="" alt="Banks should offer better rates to counter stablecoins: Bitwise CIO">
 <figcaption style="text-align: center;">
 The highest-yielding US bank accounts offer a lower interest rate compared to most stablecoins. Source: <a href="https://www.bankrate.com/banking/savings/average-savings-interest-rates/" rel="noopener noreferrer nofollow" target="https://www.bankrate.com/banking/savings/average-savings-interest-rates/">Bankrate</a>&nbsp;
 </figcaption>
</figure>
Stablecoin proponents have said the tokens offer other advantages over banks, with faster transaction speeds at a lower cost, while having no holding fees.
<h2 id="banks-lobbied-against-stablecoin-yields">Banks lobbied against stablecoin yields</h2>
Last month, the banking industry <a href="https://cointelegraph.com/news/banking-lobby-change-genius-act" rel="noopener noreferrer nofollow">lobbied</a> to prevent stablecoin issuers from offering yields, claiming that there is a “<a href="https://cointelegraph.com/news/us-bankers-want-stablecoin-yield-loophole-closed" rel="noopener noreferrer nofollow">loophole</a>” in the stablecoin-regulating GENIUS Act.&nbsp;
The crypto industry <a href="https://cointelegraph.com/news/crypto-groups-reject-bank-lobby-stablecoin-genius-act" rel="noopener noreferrer nofollow">pushed back</a> against banks’ concerns, warning that revisions to the legislation would benefit traditional banks while stifling innovation and consumer choice.
Magazine: <a href="https://cointelegraph.com/magazine/bitcoin-price-50k-bear-market-forecast-justin-sun-world-liberty-financial-hodlers-digest/" rel="noopener noreferrer nofollow">Bitcoin may sink ‘below $50K’ in bear, Justin Sun’s WLFI saga: Hodler’s Digest</a>

Banks should offer better rates to counter stablecoins: Bitwise CIO

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