Higher interest rates paid on U.S. bank deposits were followed by slower growth in dollar-linked stablecoins, according to a new Bank for International Settlements working paper. The finding adds empirical evidence to a policy debate over whether stablecoins and traditional bank accounts compete for the same pool of money.

The paper, published October 13 by BIS economists Rashad Ahmed and Iñaki Aldasoro, analyses weekly U.S. data from January 2019 through June 2025. The authors compare changes in deposit rates with stablecoin market-capitalisation growth while controlling for Treasury yields, exchange rates, bitcoin prices, volatility and broader crypto-market conditions.

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A measurable link, with important caveats

The study reports that the average 10-week stablecoin growth rate in its sample was about 15%. In the baseline estimate, a one-basis-point increase in the extent to which banks passed higher policy rates to depositors was associated with a roughly three-percentage-point reduction in that growth rate, to about 12%. One basis point equals 0.01 percentage point.

An alternative instrumental-variable estimate produced an effect about three times larger, implying growth closer to 6% over the same horizon. The authors and independent coverage both caution that this estimate is less precise. Even under that result, stablecoin supply growth slowed rather than turned negative.

The relationship was stronger for USDC than for USDT. The paper says that may reflect USDC's closer connection to U.S. users and financial conditions, while USDT has a larger international footprint. The researchers did not find the same pattern for crypto assets that are not designed to maintain a stable value, which supports their interpretation that the result is tied to the cash-like features of stablecoins rather than crypto markets generally.

What the study does not show

The paper does not conclude that stablecoins have already drained aggregate bank deposits or reduced bank lending. Its sample also includes only one sustained episode of high U.S. interest rates, limiting the number of policy cycles available for comparison. The results therefore describe a statistically estimated response within a particular period, not a universal forecast.

For banks, the research suggests that deposit pricing may influence whether savers keep money in conventional accounts or move part of it into digital-dollar instruments. For policymakers, it sharpens a broader question: if stablecoins become a larger payments and savings tool, the competitiveness of bank deposits could matter alongside reserve, liquidity and consumer-protection rules.

Stablecoins and bank deposits are not identical products. Deposits may pay interest and can benefit from deposit-insurance regimes, while stablecoins can offer round-the-clock transfers, access to crypto markets and settlement across digital platforms. The study's result is consistent with users comparing those features against the return available on cash at a bank. It does not imply that every stablecoin holder would otherwise maintain the same funds in a U.S. deposit account.

The authors also distinguish deposit-rate pass-through from the Federal Reserve's policy rate alone. Banks differ in how quickly and fully they raise the rates offered to customers. That variation gives the researchers a way to examine whether more competitive deposit pricing is followed by a different stablecoin-growth path after accounting for wider financial conditions.

The practical takeaway is narrower than claims that stablecoins are replacing banks. The BIS evidence indicates partial substitution at the margin: when regulated deposits become more attractive, stablecoin expansion appears to cool. Whether that relationship persists through future rate cycles, wider stablecoin adoption and evolving U.S. regulation will require more data.

Sources

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