Stablecoins Offer Better Rewards, Not Threats, Says Bitwise Executive

US banks should focus on offering better rewards to retain customers rather than blaming stablecoins for potential threats to their profits, according to Matt Hougan, Chief Investment Officer at Bitwise. 

Speaking on social media platform X, Hougan argued that banks have long relied on customer deposits as a cheap source of capital and should instead provide higher interest rates to compete fairly.

Stablecoins Spur Competition, Not Collapse

Hougan’s remarks follow concerns raised by Citi last month, which warned that yield-bearing stablecoins could prompt significant bank withdrawals. US banks have since lobbied Congress to impose stricter regulations on stablecoin yields, citing risks to the traditional banking model.

In response to these claims, Hougan dismissed “first-order thinking,” saying that fears about stablecoins undermining lending markets are misguided. He compared the current scenario to the money market funds of the 1970s, which disrupted savings accounts but ultimately expanded credit access.

Stablecoins, Hougan explained, empower individual savers by offering better returns and connecting them directly to borrowers through decentralized finance (DeFi) platforms. “The loser here is bank profit margins. The winner here is individual savers. The economy will be just fine,” he stated.

Better Returns for Consumers

Stablecoin platforms currently offer yields as high as 5%, far exceeding the national average of 0.6% and even the highest bank-offered rates around 4%, according to Bankrate. With inflation and fees eating into savings, deposits in traditional banks often lose value over time.

The debate over stablecoin regulation intensified after banks pushed for restrictions under the GENIUS Act, arguing that yield-bearing stablecoins exploit regulatory gaps. However, the crypto industry warns that tighter rules would protect entrenched players while limiting innovation and reducing consumer choice.

As competition heats up, Hougan’s perspective reflects a broader shift—one where market-driven solutions, rather than regulatory barriers, may redefine how people save and access credit in the digital age.