Bitwise’s investment chief, Matthew Hougan, argues that banks should increase interest rates on deposits to retain customers in the face of competition from stablecoins. He criticized banks for using depositors as a free capital source and suggested they should reward depositors more to prevent them from switching to yield-bearing stablecoins, which offer significantly higher returns. Hougan dismissed concerns that stablecoins would harm lending markets as simplistic, noting that individuals using stablecoins can provide credit through decentralized finance (DeFi) applications. He argued that the competition from stablecoins ultimately benefits consumers, allowing for better savings rates and more direct lending opportunities. Currently, stablecoins can offer yields exceeding 5%, while traditional bank accounts yield only around 0.6%. Hougan's remarks come amid discussions on regulations for stablecoin issuers and their yields, which some banks have lobbied against, claiming it gives an unfair advantage to stablecoins over traditional banking services.

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