In recent months, public discussions on stablecoins have intensified. Matt Hougan, CIO of Bitwise Asset Management, speaks out against the comparison between stablecoins and the free banking era, highlighting that such analogies are misplaced.
Critique of Analogies
Matt Hougan has publicly criticized what he calls 'careless comparisons' between stablecoins and the free banking era, arguing that they distort current policy discussions. In his post, Hougan noted that such analogies are misleading. He stated, 'The free banking era started 188 years ago; letters were delivered on horseback.'
What Was the Free Banking Era
The free banking era in the U.S. lasted from 1837 to 1863, characterized by the proliferation of bank-issued paper currency in the absence of a national currency standard. Banks were allowed to issue their notes, often backed by unreliable assets, such as low-quality bonds. Hougan pointed out that this created an unstable financial system where the value of notes varied based on distance from the issuing bank.
Modern Realities of Stablecoins
Hougan emphasized regulatory frameworks for stablecoins, such as the GENIUS Act, which imposes clear rules on asset backing and redemption terms. He noted that modern stablecoins are tradable on global exchanges with remote redemption capabilities. According to Hougan, analogies should clarify, not obscure, and he urged sticking to factual bases in evaluating stablecoins.
Matt Hougan's remarks highlight the importance of accuracy in discussions about stablecoins and the need to differentiate historical contexts from modern financial realities.
