Bitwise's Chief Investment Officer Matt Hougan argues that banks need to offer higher interest rates on deposits to compete against the increasing presence of stablecoins.
Key Points from Hougan's Statement
Hougan pointed out that banks have long abused depositors as a free source of capital. If they are worried about competition from stablecoins, they should pay higher interest on deposits. He also noted that banks are only concerned because they fear for their profit margins.
Comparison to 1970s Money Markets
In response to a Bloomberg report stating that smaller banks face a new competitor in stablecoins as they rely on customer deposits for lending, Hougan compared the situation to the rise of money markets in the 1970s, which provided higher-yield alternatives to traditional savings accounts.
Legislation and Bank Responses
The banking industry has lobbied against allowing stablecoin issuers to offer yields, expressing concerns that changes could hinder innovation and consumer choice. Hougan noted that these actions could stifle growth in the financial sector.
Hougan's focus suggests a need for banking reform to retain relevance amid the growing popularity of stablecoins and other financial innovations.
