BIS Study Links Higher Bank Deposit Rates to Slower Stablecoin Growth

Economists Rashad Ahmed and Iñaki Aldasoro analyzed U.S. data from January 2019 to June 2025 to determine how interest-bearing bank products influence the demand for non-interest-bearing stablecoins. Their baseline model indicates that when traditional banks offer higher yields, capital flows away from stablecoin reserves, resulting in a cooling of their market capitalization growth. While average growth for these assets hovered around 15% during the study, the observed rate hikes could compress that expansion to roughly 12%.

The research highlights a notable disparity between major stablecoins. Circle’s USDC exhibited a 4.8-percentage-point reduction in growth following a one-basis-point rate hike, compared to just 1.9 percentage points for Tether’s USDT. Authors attribute this variance to the different user bases: USDC maintains deeper ties to U.S. institutional investors, whereas USDT serves a broader international market less tethered to domestic banking incentives. An alternative statistical model using instrumental variables suggested an even steeper potential impact of 9.1 percentage points, though this estimate applies specifically to high-interest-rate environments.

These results arrive as U.S. banking groups and crypto firms clash over regulatory frameworks like the GENIUS Act. Banking institutions have expressed concern that stablecoin platforms offering rewards or yield-like structures could drain insured deposit accounts. Conversely, the BIS study demonstrates that the reverse mechanism is also active: traditional banks exert competitive pressure on the crypto sector simply by adjusting their own deposit interest rates. The authors note, however, that these findings represent a single cycle of interest rate fluctuations and do not definitively prove that stablecoin adoption has permanently reduced total system-wide bank lending.