- Bitwise CIO Matt Hougan has criticised US banks for lobbying against stablecoins, arguing that they should instead increase the interest rates on deposits to compete with the new financial products.
- Hougan’s comments were a direct response to a Bloomberg report that highlighted the vulnerability of community and regional banks to competition from stablecoins, which offer higher yields.
- In a separate client memo, Hougan also predicted strong gains for Solana by the end of the year, driven by inflows from exchange-traded products and corporate treasury purchases.
Bitwise’s CIO Matt Hougan has criticised US banks for opposing stablecoins, arguing they should raise deposit rates instead of lobbying against competition.
His remarks are a direct response to a Bloomberg report stating that community and regional banks, which rely heavily on deposits for lending, are most vulnerable, comparing it to the panic around money market funds in the 1970s, which offered higher yields and caused massive withdrawals across banks.
“If local banks are worried about competition from stablecoins, they should pay more interest on deposits,” Hougan wrote on X, adding that banks have long used depositors as “a free source of capital”.
Hougan also called the Bloomberg article “absurd”, particularly the part where stablecoins could collapse local credit markets. He said that even if banks lose deposits, capital would still flow to borrowers through decentralised finance.
“The loser here is bank profit margins. The winner here is individual savers. The economy will be just fine,” he added.
It should be noted that Citi expects 10% of global post-trade market turnover to be processed through stablecoins and tokenised securities, in just five years.
Related: Japan Post Bank to Join DCJPY Network, Bringing Tokenised Assets to 120M Accounts
Solana Could See Strong Gains Next Year
In a recent separate client memo, Hougan also predicted strong gains for Solana by the end of the year, citing inflows from exchange-traded products and corporate treasury purchases. He said the same mix fueled Bitcoin’s rise from US$40K (AU$62K) in early 2024 to nearly US$125K (AU$189K), and Ethereum’s climb to almost US$5K (AU$7.5K) just last month.
The memo comes shortly after the Solana community approved the implementation of Alpenglow, a major upgrade that could boost Solana’s performance by giving it Web2 responsiveness while maintaining L1 security guarantees.
Related: SwissBorg Hit by $41M Solana Hack via Kiln API Exploit
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