US banks' deposit rates may help determine how quickly dollar stablecoins grow, according to a Bank for International Settlements working paper published October 13 and drawing renewed attention on October 17. The researchers found that increases in rates paid to depositors were followed by slower growth in the market value of reserve-backed stablecoins. That points to some competition for liquid savings, but it is not evidence that stablecoin adoption has already drained the banking system of deposits or loans.

What the researchers measured

Rashad Ahmed and Iñaki Aldasoro analyzed weekly US data from January 2019 through June 2025. They compared changes in bank deposit rates with subsequent changes in stablecoin market capitalization, while accounting for Treasury yields, the broader interest-rate environment, exchange rates, bitcoin prices and financial-market volatility. Their question was about substitution: when a conventional deposit becomes more attractive, do fewer funds flow toward dollar tokens used for payments and liquidity?

Related reporting: BIS Study Links Higher Deposit Rates to Slower Stablecoin Growth

The paper's ordinary-least-squares estimate suggests that one basis point of deposit-rate repricing—0.01 percentage point—was associated with about three percentage points less stablecoin growth over ten weeks. Against an average ten-week growth rate of roughly 15% in the sample, that would mean growth closer to 12%, not a decline in the total stock of stablecoins. An alternative instrumental-variable estimate was roughly three times larger, but it depends on additional assumptions about how banks pass policy-rate changes through to customers. Neither estimate should be read as a mechanical prediction for the next rate move.

Why USDC and USDT differed

The relationship was stronger for USDC than for USDT. The authors describe that pattern as consistent with USDC's closer connection to US depositors, rather than proof that every stablecoin holder chooses between a token and a bank savings account. They also report that the same effect was not found for non-stablecoin cryptoassets in a placebo test. That distinction supports the idea that the result reflects competition between two forms of liquid dollar holdings, although other market forces can still affect token supply.

For banks, the finding implies that deposit pricing may remain one lever for retaining customers as tokenized dollars spread. Yet paying savers more also raises banks' funding costs. The trade-off is especially relevant when policy rates are high enough for customers to notice the gap between returns on deposits and alternative liquid assets. The paper examines historical behavior rather than recommending that banks raise rates or predicting how individual institutions will respond.

What the study does not settle

The authors caution that a shift into stablecoins does not necessarily reduce aggregate bank deposits. Stablecoin issuers hold reserves, and some of those funds can return to banks in a different form. The analysis also does not establish that lending falls when stablecoin supply rises. Its sample includes one major high-rate episode and ends in June 2025, leaving open how new products, regulations or changes in token incentives could alter the relationship.

CoinDesk independently reported the paper's findings on October 17. The publication date matters: this is a recent examination of an October 13 research release, not a new rule or announcement from the BIS over the weekend. The working paper expressly says its conclusions are the authors' views, not necessarily those of the BIS or its member central banks. For depositors and stablecoin operators, the useful takeaway is narrower than a contest with a declared winner: the price banks pay for deposits appears to influence token growth, while the broader consequences for bank funding remain uncertain.

Sources

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