Banks Slammed for Low Rates as Stablecoins Gain Ground

Banks Slammed for Low Rates as Stablecoins Gain Ground, Says Matt Hougan

Written by Aaron S.,

Editor-In-Chief

Last Updated: September 10, 2025

Key Takeaways

Bitwise CIO Matt Hougan said banks should raise interest rates instead of blaming stablecoins for competition;
Smaller banks may be more at risk, as they rely on deposits to fund loans and cannot access other markets;
Hougan argued stablecoins will not stop lending, as they move it to decentralized platforms outside traditional banking.

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Matt Hougan, Chief Investment Officer at Bitwise, has suggested that banks should focus on giving customers better interest rates rather than treating stablecoins as a threat.

On September 9, he stated on X that traditional banks would be less concerned about competition from digital assets if they offered more attractive returns on deposits.

Hougan argued that many banks have relied on customer deposits as a cheap funding source, often paying very little in return. This practice has left them exposed to newer alternatives that reward users more fairly.

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Hougan's comments followed a report from Bloomberg, which discussed how wages paid in stablecoins could affect the banking industry. The report highlighted that smaller financial institutions may be more vulnerable because they rely on deposits to issue loans, unlike larger banks, which can borrow from other markets.

Hougan pushed back against the idea that stablecoins would harm lending markets. He dismissed these claims as exaggerated and said they fail to take into account how money can move through different systems.

He explained that even if banks lose deposits, funds will not disappear. They could instead be used to support lending directly through decentralized platforms.

He acknowledged that less money in banks might reduce how much they can lend. However, he added that people who hold stablecoins are still able to finance loans elsewhere, just not through traditional banking institutions.

Federal Reserve Governor Christopher Waller recently shared his thoughts on how banks and policymakers should approach stablecoins. What did he say? Read the full story.