Bitwise Chief Investment Officer Matt Hougan has sharply criticized U.S. banks for expressing concerns about competition from yield-bearing stablecoins instead of improving their own offerings to retain customers. In a series of public comments, Hougan labeled banks' fears of stablecoins disrupting local lending markets as "absurd" and accused them of "abusing depositors as a free source of capital for decades."
The core of the debate centers on yield disparities: stablecoins currently offer returns up to 5%, dramatically outperforming the U.S. national average savings account rate of just 0.6% and even the best high-yield savings accounts that offer around 4%. This significant gap has made stablecoins increasingly attractive to consumers seeking better returns, especially when considering inflation's erosion of traditional savings values.
Hougan's comments came in response to reports from Bloomberg and banking institutions like Citi, which warned that yield-bearing stablecoins could trigger substantial deposit withdrawals from community and regional banks. These smaller institutions rely heavily on customer deposits for lending operations and lack access to the wholesale funding markets available to larger banks.
The banking industry has responded with regulatory pressure, with several major banking associations urging Congress to tighten stablecoin regulations under the GENIUS Act. They argue that a loophole in the current legislation allows stablecoin issuers to indirectly offer yields through affiliated exchanges or partners, despite the act banning direct interest payments by issuers.
Hougan countered that instead of seeking regulatory protection, banks should adapt by offering competitive interest rates. He suggested that stablecoin competition could ultimately benefit consumers and the economy by forcing banks to provide better value. "The loser here is bank profit margins. The winner here is individual savers," Hougan stated, adding that capital would simply flow through alternative channels like DeFi applications rather than disappearing from the lending ecosystem.