When US banks pay more on savings, stablecoins grow more slowly, according to a new working paper published by the Bank for International Settlements.
The paper, “Are Stablecoins and Bank Deposits Substitutes?”, was written by Iñaki Aldasoro of the BIS and Rashad Ahmed of the Andersen Institute for Finance and Economics. It was published on 13 October as BIS Working Paper No. 1382.
As with all BIS working papers, it reflects the authors’ views rather than necessarily those of the BIS.
What the authors found
Using weekly US data from January 2019 to June 2025, the authors tracked how stablecoin market capitalisation responded to changes in bank deposit rates.
Over a typical 10-week period in the sample, stablecoin market value grew by about 15%. Their baseline estimate suggests each basis point rise in deposit rates cut that growth by about 3 percentage points, to around 12%.
A second method, designed to separate cause from coincidence, produced an effect roughly three times larger. Under that estimate, growth fell to about 6%. Stablecoins kept growing in both cases, just more slowly.
How they isolated the effect
The authors used a known pattern in bank behaviour. Banks barely raise savings rates while the US federal funds rate is below about 3%, then reprice much faster once it moves above that level.
That shift let them test whether stablecoin growth responded to deposit rates themselves, rather than to wider market conditions.
USDC more affected than USDT
The effect was stronger for Circle’s USDC than for Tether’s USDT. The authors put that down to USDC’s closer ties to US users.
The paper concludes that banks “retain some influence over the pace of that adoption through deposit pricing.”
Why it matters for the yield debate
Stablecoins paid holders no interest during the period studied, which may help explain why higher bank rates made them less attractive.
The authors say regulators should weigh whether stablecoin issuers should be allowed to pay holders yield, and the trade-offs of requiring issuers to hold part of their reserves as bank deposits.
That question is already live. Banks have lobbied to keep stablecoin yield off the table, and the dispute hung over the CLARITY Act’s failed Senate vote. US regulators are also writing rules to implement the GENIUS Act stablecoin law, which takes effect in January.
The limits
The study covers a single high-rate cycle, and the findings are for the US only. How the relationship holds if stablecoins start paying yield, or if rates fall back below 3%, is untested.
