According to a Bank for International Settlements (BIS) working paper (No. 1382), BIS economist Iñaki Aldasoro and Rashad Ahmed from the Andersen Institute for Finance and Economics conducted a study examining whether stablecoins and bank deposits are substitutes. Using weekly U.S. data from January 2019 to June 2025, the study employed local projection methods to estimate how the market capitalization of stablecoins responds to changes in deposit interest rates.
The results show that rising deposit rates predict a slowdown in stablecoin growth. Against a backdrop of a 15% average weekly growth in stablecoins, OLS estimates indicate that each 1-basis-point increase in deposit rates reduces growth by approximately 3 percentage points, bringing it down to around 12%. By exploiting the nonlinear feature of banks’ more aggressive deposit pricing following federal funds rates exceeding approximately 3% as an instrumental variable, the estimated effect increases to about 9 percentage points, reducing growth to around 6%. Placebo tests on non-stablecoin crypto assets found no similar effect.
BIS Study: Rising Deposit Rates May Slow Stablecoin Growth, USDC More Affected Than USDT
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Summary
A BIS working paper (No. 1382) shows that rising interest rates could slow stablecoin growth. Using U.S. weekly data from 2019 to 2025, the study estimates that a 1 basis point increase in funding rates may reduce stablecoin growth by 3 percentage points. At higher rates, the decline could reach 9 percentage points, pushing growth down to 6%. USDC faces greater pressure than USDT. No similar effect was observed in non-stablecoin crypto assets.
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