BIS paper links higher bank deposit rates to slower stablecoin growth

What happened

A working paper from Bank for International Settlements economists Rashad Ahmed and Iñaki Aldasoro examined whether stablecoins compete with bank deposits for funds. The paper, titled Are Stablecoins and Bank Deposits Substitutes?, used weekly U.S. data from January 2019 to June 2025.

The baseline model found that a one-basis-point rise in deposit rates was associated with approximately 2.8 percentage points less cumulative stablecoin growth over the following ten weeks. The researchers described the result as roughly three percentage points less growth.

The link was stronger for Circle's USDC than for Tether's USDT. The researchers estimated USDC growth slowed by 4.8 percentage points, against 1.9 percentage points for USDT.

Why it matters

The authors say the results show stablecoins and bank deposits are partial substitutes. They conclude that banks retain some influence over the pace of stablecoin adoption through deposit pricing.

The paper also points to policy choices. The authors said regulators should weigh whether stablecoin issuers may pay holders yield, and the trade-offs of requiring issuers to keep part of their reserves in bank deposits.

That debate is active in Washington. Banks have lobbied to keep stablecoin yield off the table, a fight that loomed over the Clarity Act's failed Senate vote, while the OCC, FDIC and Treasury write rules for the GENIUS Act, which takes effect in January.

What the data shows

Average stablecoin market capitalization growth over a ten-week period was approximately 15% in the study's sample. Applying the rounded baseline estimate would reduce that growth rate to roughly 12%.

A second method designed to isolate cause and effect put the figure at about 6%. An instrumental-variable model estimated a larger nine-percentage-point slowdown after a one-basis-point increase in deposit rates.

The authors relied on a pattern in bank behavior: lenders barely raise savings rates until the federal funds rate passes about 3%, and then they reprice much faster.

What is still unclear

• The researchers cautioned that their findings do not establish that stablecoin adoption has reduced total bank deposits or lending across the U.S. banking system.
• Working papers reflect the authors' views, not necessarily the BIS's, and the sample spans a single high-rate cycle in which stablecoins paid holders no interest.

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