The CIO of Bitwise believes that traditional finance stablecoins will struggle to capture a significant share of the market.
The crypto community reacted differently to BofA’s stablecoin plans; many recognized potential benefits for crypto, but critics argued that it resembled a CBDC.
Bitwise’s CIO, Matt Hougan, predicts that stablecoins introduced by established financial firms will struggle to gain significant traction in the market.
“TradFi stablecoins will find it harder than they think to win market share,” Hougan said in an X post on Feb. 26.
He cited Bank of America’s stablecoin plans and highlighted CEO Brian Moynihan’s February 25 comments, in which Moynihan suggested that BofA might issue a dollar-pegged stablecoin once regulations are in place.
This news surfaced shortly after Jeremy Allaire, co-founder of Circle—the company behind USDC—insisted that all USD stablecoin issuers should register in the U.S.
The crypto community reacted with mixed opinions on BofA’s stablecoin news. Some welcomed it as progress for crypto adoption, while others criticized it as a disguised central bank digital currency (CBDC).
“So are they going to just ‘rebrand’ CBDC’s and just call them ‘stablecoins’?” one commentator wrote on X.
“Sounds CBDCish,” another industry observer said.
Others dismissed the comparison, arguing that a stablecoin from BofA would differ significantly from a CBDC.
“There’s a fundamental difference. A CBDC is a direct liability of the central bank while a stablecoin is a liability of the issuer. This has huge consequences,” digital asset researcher Anderson wrote.
Some believe that financial institutions are rebranding centralized dollar-pegged stablecoins as a U.S. CBDC, a perspective that may align with the U.S. government’s strategy to support the dollar through stablecoins.
In an executive order dated January 23, President Donald Trump vowed to protect the U.S. dollar’s sovereignty by fostering the global growth of compliant dollar-backed stablecoins.
On the other hand, his executive order explicitly prohibited any efforts to develop a U.S. central bank digital currency, confirming his commitment to oppose the development of CBDC in the United States of America.
Some community members expressed apprehension about the BofA news, questioning its potential impact on Tether, which issues USDt, the largest stablecoin by market capitalization.
“So Tether will likely be outlawed or treated differently compared to other US stablecoins. They are lobbying for this,” one commentator wrote.
On February 26, Paolo Ardoino, CEO of Tether, called recent U.S. stablecoin legal moves “very troubling” in an X post that referenced a tweet from Rumble founder Chris Pavlovski.
“I’m getting a strong feeling that this toxic stablecoin legislation is negatively impacting Bitcoin price and hurting confidence in crypto,” Pavlovski wrote.
He further stated that the draft legislation appears designed to eliminate competition in the stablecoin market.
Ardoino has repeatedly emphasized that Tether supports a competitive stablecoin market but does not view itself as a competitor to issuers in the U.S. and Europe.
“Our focus has to be where we are needed the most,” he said, mentioning that users in nations like Argentina, Turkey, and Vietnam generate the greatest demand for Tether.
