✓ Official source USDC
BIS paper: when U.S. banks pay savers more, stablecoin growth slows, especially for USDC
Summary
A Bank for International Settlements working paper by Rashad Ahmed and Iñaki Aldasoro finds that increases in U.S. bank deposit rates are followed by slower stablecoin growth, evidence the authors say shows stablecoins and bank deposits are partial substitutes, according to the BIS and CoinDesk.
Using weekly U.S. data from January 2019 to June 2025, the paper says that, against average ten-week stablecoin market-cap growth of about 15%, each basis point of deposit repricing is associated with roughly 3 percentage points less growth under its ordinary least squares estimates, which CoinDesk described as cutting growth to about 12%.
The authors’ instrumental-variable estimates, which exploit the way banks reprice deposits more aggressively once the federal funds rate exceeds about 3%, are roughly three times larger; CoinDesk said that would slow growth to about 6%, and that the authors flagged some weakness in that method.
The effect is stronger for Circle’s USDC than for Tether’s USDT, which the paper links to USDC’s closer ties to U.S. depositors, and no comparable effect appears for non-stablecoin crypto assets.
The BIS says the analysis concerns how funds are allocated between assets and does not establish that stablecoin growth reduces total bank deposits or lending, and CoinDesk noted the sample covers only one high-rate period.
Updates
- Update, : Oct. 18: Decrypt covered the same BIS working paper, reiterating that higher U.S. bank deposit rates predict slower stablecoin growth, with a stronger effect for USDC than USDT, and noting the authors’ caveat that working papers reflect their views rather than necessarily the BIS’s.
Key facts
- The paper says the results hold across different deposit products and for stablecoins supplied to decentralized finance protocols.
- The BIS says the findings suggest that if stablecoins become more widely used, they could affect banks’ funding conditions and the transmission of monetary policy.
- BIS Working Paper No 1382 is dated October 2026; the BIS says its working papers reflect the views of the authors and not necessarily those of the BIS or its member central banks.
- CoinDesk quoted the authors as writing that banks “retain some influence over the pace of that adoption through deposit pricing.”
- CoinDesk noted Bank of America CEO Brian Moynihan warned in January that as much as $6 trillion in deposits could move into stablecoins and related yield-bearing products.
- CoinDesk cited a December Federal Reserve staff analysis explaining that money placed in stablecoins can return to banks as issuer deposits, changing who supplies banks’ funding even when total deposits are unchanged.
- Decrypt reported that under the authors’ baseline estimate, a one-basis-point rise in deposit rates cut typical ten-week stablecoin market-cap growth from about 15% to roughly 12%, and under a second causal method to about 6%.
- Decrypt said the authors urged regulators to weigh whether stablecoin issuers may pay holders yield and the trade-offs of requiring issuers to keep part of their reserves in bank deposits, noting that banks have lobbied against stablecoin yield in the Clarity Act debate and that GENIUS Act implementing rules are being written by the OCC, FDIC and Treasury.
- Decrypt reiterated that working papers reflect the authors’ views, not necessarily the BIS’s, and that the sample spans a single high-rate cycle in which stablecoins paid holders no interest.