BIS Study: Higher Bank Deposit Rates Slow Stablecoin Growth, Led by USDC
By Coinvote
A Bank for International Settlements working paper finds that stablecoin market capitalization grows more slowly after U.S. banks raise deposit rates, and USDC reacts more than USDT. The result lands as Washington debates stablecoin yield and writes GENIUS Act rules.
Savings rates appear to act as a brake on stablecoin growth
A new working paper from the Bank for International Settlements (BIS) suggests that U.S. banks have a lever against stablecoin adoption: the interest they pay savers. Economists Iñaki Aldasoro and Rashad Ahmed examined weekly U.S. data from January 2019 through June 2025. They found that stablecoin growth slowed after banks lifted deposit rates, according to both Decrypt and CoinDesk.
The slowdown was modest in absolute terms. Stablecoins kept expanding in every scenario the authors tested. Higher deposit rates only reduced the speed of that expansion, which is a narrower claim than the idea that savers abandon tokens for bank accounts.
How the authors tried to separate cause from coincidence
Rates and stablecoin supply can move together for reasons unrelated to each other, so the authors needed a way to isolate the effect of deposit pricing. Decrypt reported that they used a feature of bank behavior. Savings rates at lenders stay nearly flat while the federal funds rate is below roughly 3%, and after that threshold they are repriced far more quickly.
CoinDesk added that the analysis took account of bitcoin's price, Treasury yields and wider financial conditions. It also noted that the authors' preferred estimate corrects for the possibility that banks lift rates because stablecoins are growing. In plain terms, banks may also react to stablecoins, and the second method tries to strip that reaction out.
The numbers behind the finding
Both outlets report the same headline results, which come from a one basis point rise in average deposit rates. A basis point is 0.01 percentage points, which CoinDesk described as a small figure. Decrypt described such a shift as large for a weekly change, since deposit rates tend to move slowly.
- Typical stablecoin market capitalization growth over a ten-week span in the sample was about 15%.
- Under the baseline estimate, a one basis point rise in deposit rates cut that growth to roughly 12%.
- Under the second method, which is built to isolate cause and effect, growth fell to about 6%.
- The effect was stronger for Circle's USDC than for Tether's USDT.
Why USDC reacts more than USDT
The authors tied the difference between the two largest dollar tokens to the makeup of their users. Both outlets reported that USDC's closer ties to U.S. users fit the pattern. A token used mostly by American savers competes directly with American bank accounts, so a better rate at a U.S. bank is more likely to pull on its holders.
The paper does not say that USDT holders ignore interest rates. It only finds a weaker link in this U.S.-focused data set. Readers should treat the USDC and USDT gap as a statement about this sample rather than a ranking of the two issuers.
What each outlet adds to the picture
The two accounts agree on the core results, but they supply different context. CoinDesk stressed the second estimate's weakness, saying the authors themselves flagged some problems with that method. It described the effect as roughly three times larger than the baseline. Decrypt presented the 6% result more directly as the cause-and-effect estimate.
CoinDesk also brought in the bank-side argument. It cited Bank of America CEO Brian Moynihan, who cautioned in January that up to $6 trillion of deposits might move to stablecoins and comparable products that pay returns. It also summarized a December Federal Reserve staff analysis, which said stablecoin money can return to banks as issuer deposits. That changes who supplies a bank's funding even when total deposits stay the same.
Decrypt focused on the policy fight. It linked the paper to bank lobbying against stablecoin yield, a dispute that loomed over the Clarity Act's failed Senate vote. It also reported that the OCC, FDIC and Treasury are drafting regulations for the GENIUS Act, with the law due to take effect in January.
Why the result matters for banks, issuers and regulators
The study speaks to an argument at the center of stablecoin policy. If banks can slow adoption by paying more, they hold a market-based defense that does not require restrictions on issuers. That defense has a price, however. CoinDesk, citing the Fed analysis, noted that paying more to retain customers raises banks' funding costs. The analysis indicated that banks might offer higher rates selectively to the customers likeliest to move their money, and pay less to depositors who are less inclined to leave.
The authors recommended that regulators consider whether issuers should be permitted to pass yield to holders, and weigh the costs and benefits of obliging issuers to park some reserves at banks. For project teams building on dollar tokens, those two choices could shape how attractive a stablecoin is compared with a savings account.
Limits of the paper and what to watch
Both outlets underline the caveats. Decrypt pointed out that working papers reflect the authors' views rather than the BIS's official position. The data span only one period of high interest rates, during which stablecoin holders earned no yield. CoinDesk added that the paper does not establish actual losses of bank deposits or lending, and that results could differ as stablecoins that pay yield and tokenized money market funds grow.
Several open questions follow. It is unclear whether the same relationship would hold if issuers were allowed to pass yield to holders, which is the very issue lawmakers are fighting over. It is also unknown how the final GENIUS Act rules from the OCC, FDIC and Treasury will treat reserve deposits. Readers tracking the sector can compare future deposit-rate moves with stablecoin supply data to see whether the pattern persists.
Market snapshot
| Asset | Price | 24h | 7d | Market cap |
|---|---|---|---|---|
| Bitcoin (BTC) | $81,096 | -0.5% | -2.4% | $1.63 trillion |
CoinGecko data as of 2026-10-18 (UTC).
FAQ
What did the BIS paper find about stablecoins and bank deposit rates?
According to the paper, stablecoin expansion decelerates after U.S. banks increase what they pay on deposits. A one basis point rise lowered the growth of stablecoin market capitalization over ten weeks from roughly 15% to roughly 12% in the baseline estimate, and to roughly 6% under the second method.
Do higher deposit rates stop stablecoins from growing?
No. Both Decrypt and CoinDesk reported that growth slowed but did not reverse. The paper also does not establish actual losses of bank deposits or lending.
Why is USDC affected more than USDT?
The authors said the stronger link for USDC is consistent with its closer ties to U.S. users. Those users are the ones most exposed to changes in U.S. bank deposit rates.
Sources
- Decrypt: Banks Hold a Lever Over Stablecoin Adoption, BIS Economists Say (2026-10-18)
- CoinDesk: Banks could slow stablecoin growth by paying savers more, BIS paper finds (2026-10-17)
- CoinGecko (market data)
Written by the Coinvote news desk from reporting by Decrypt and CoinDesk. Not financial advice.
