Banks May Deter Stablecoin Growth by Increasing Deposit Rates, BIS Study Suggests
Written with artificial intelligence.
A working paper from the Bank for International Settlements indicates that a slight increase in U.S. bank deposit rates could slow the growth of stablecoins like USDT and USDC. Specifically, a 1 basis point rise in rates is predicted to reduce ten-week stablecoin growth from 15% to 12%.
Impact of Bank Deposit Rates on Stablecoin Growth
According to a recent working paper by the Bank for International Settlements (BIS), banks might influence the pace of stablecoin adoption by raising deposit rates. Researchers Rashad Ahmed and Iñaki Aldasoro analyzed data from January 2019 to June 2025 and discovered that even a minimal increase of one basis point (0.01 percentage points) in average bank deposit rates could lead to a decrease in stablecoin market growth. Specifically, this increase could reduce ten-week growth rates from approximately 15% to 12%.
The study also suggests that the impact could be significantly larger, with estimates indicating that growth could slow to around 6% when accounting for banks adjusting rates in response to stablecoin market dynamics. However, the authors acknowledged some limitations in this methodology. Notably, the effect was observed to be more pronounced for Circle’s USDC compared to Tether’s USDT, which may be attributed to USDC's stronger connection to U.S. users.
Bank executives have expressed concerns over the potential impact of stablecoins on traditional banking. For instance, Bank of America CEO Brian Moynihan has warned that up to $6 trillion in deposits could shift towards stablecoins and other yield-generating products, which might affect banks' lending capabilities and increase borrowing costs.
The relationship between stablecoin growth and bank deposit rates is complex, as stablecoin issuers may invest reserves back into banks, altering their funding dynamics. As banks adjust their deposit strategies to retain customers, they may face higher funding costs, particularly if they target more competitive rates for depositors likely to switch to stablecoins. The BIS paper does not quantify the potential losses in bank deposits or lending capacity but highlights the banks' ability to influence stablecoin adoption through their deposit pricing strategies.