A BIS study found that a one-basis-point increase in deposit rates corresponds to roughly three percentage points less stablecoin market cap growth over 10 weeks. USDC showed a stronger respo
A Bank for International Settlements (BIS) working paper finds that higher bank deposit rates can slow stablecoin growth, as savers shift money toward interest-bearing accounts. Researchers Rashad Ahmed and Iñaki Aldasoro analyzed weekly U.S. data from January 2019 through June 2025. Their findings show that USDC responds more strongly to deposit-rate increases than USDT.
https://twitter.com/WuBlockchain/status/2111476632011804680?s=20Published October 13, 2026, as BIS Working Paper 1382, the study examines whether stablecoins and bank deposits compete for the same funds. The researchers found that a one-basis-point increase in deposit rates corresponds to roughly three percentage points less stablecoin market capitalization growth over 10 weeks.
An instrumental variables approach produced a larger estimated effect of approximately nine percentage points. During the study period, stablecoin market capitalization grew from less than $5 billion to more than $220 billion. Average 10-week market capitalization growth stood at approximately 15%.
The researchers also identified a threshold near a 3% federal funds rate. Below that level, banks tend to pass limited rate increases to depositors. Above it, competitive pressure encourages banks to offer better returns, making non-interest-bearing stablecoins less attractive.
The effect varied between major stablecoins. USDC recorded approximately 4.8 percentage points less market capitalization growth for each one-basis-point increase in deposit rates. USDT showed a smaller response of around 1.9 percentage points.
The paper associates USDC more closely with U.S. institutions, while USDT has a stronger offshore presence. However, the substitution effect extended beyond direct stablecoin holdings.
The researchers found that the relationship also held for stablecoins used in decentralized finance (DeFi) protocols. By contrast, bank deposit rates had no significant effect on other crypto assets outside the stablecoin category.
The analysis covers periods of low interest rates, subsequent monetary tightening, and rapid stablecoin market expansion. Because most stablecoins do not pay holders interest, higher bank deposit yields can change where investors keep their money.
The findings identify bank deposit pricing as a factor associated with stablecoin growth. They also connect stablecoin demand with broader monetary conditions, particularly when the federal funds rate rises above approximately 3%.
