Banks, stablecoins, and a battle over interest rates are shaking up the financial streets.
Matthew Hougan, the wise guy at Bitwise Investments, just dropped a truth bomb, and said that if banks feel the heat from stablecoins, they better start paying better interest, instead of whining about losing customers.
These scare articles about stablecoins destroying local lending markets are absurd.
If local banks are worried about competition from stablecoins, they should pay more interest on deposits. They're only worried because they've been abusing depositors as a free source of… https://t.co/WDALrdLxGp
— Matt Hougan (@Matt_Hougan) September 9, 2025
Raise the rates or be left behind
Imagine this, banks, for decades, treated your deposits like free money, no strings attached. Now, the game’s changing big time.
Stablecoins are offering people up to 5% on their stash. On the other hand, your trusty bank tosses you a measly 0.6% on average, maybe topping out at 4% if you’re lucky (very lucky). It’s like sitting at the kiddie table while the cool kids get dessert.
Hougan’s message? If traditional banks don’t want to be left holding the empty cup, they gotta play ball and raise those rates.
But oh no, banks prefer to lobby Congress, whining about loopholes in stablecoin laws and trying to shut down this competition.
Classic move, right? Trying to slam the door just because the game’s speeding up.
Banks are missing the bigger picture
Now, the media’s cooking up scary stories about stablecoins draining bank deposits and leaving local lenders high and dry.
Citi warned of a mass exodus from banks if stablecoins keep throwing these juicy yields around.
But Hougan calls this first-order thinking, basically, thinking only one move ahead, and missing the bigger picture.
The thing is, banks might lose some deposits, sure. But those deposits don’t just vanish. Thanks to decentralized finance, people with stablecoins will keep lending directly to borrowers.
The banks’ profits may take a hit, but everyday savers? They’re the real winners here, pocketing better returns and faster transactions with lesser fees. That’s a revolution for the little guy. And there are more little guys than banks.
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Disrupting the old model
Banks and smaller regional outfits depend heavily on deposits to make loans, unlike the big shots who tap into wholesale markets.
So yes, stablecoins are disrupting their old-school model, just like money market funds did back in the ’70s.
But what’s old is new again, except this time, it’s digital, faster, and sassier.
Hougan thinks the economy’s gonna be fine. Maybe even better. The winners? Savers and innovators. The losers? Banks that can’t keep up with the times.
Disclosure:This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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Cryptocurrency and Web3 expert, founder of Kriptoworld
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With years of experience covering the blockchain space, András delivers insightful reporting on DeFi, tokenization, altcoins, and crypto regulations shaping the digital economy.
📅 Published: September 11, 2025 • 🕓 Last updated: September 11, 2025
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