When U.S. banks paid savers more, stablecoins grew more slowly, according to a Bank for International Settlements working paper published on Oct. 13. Its authors, Rashad Ahmed of the Andersen Institute for Finance and Economics and Iñaki Aldasoro of the BIS, describe the study as, to their knowledge, “the first empirical evidence” that changes in deposit rates affect stablecoin flows.
The paper states the views of its authors, not necessarily those of the BIS or its member central banks. Their bottom line: “The size of the stablecoin sector therefore depends in part on how banks price deposits.”
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What the Data Show
The study covers 339 weeks of U.S. figures, running from January 2019 into June 2025, a stretch in which reserve-backed stablecoin market capitalization went from under $5 billion to more than $220 billion. Over that period, stablecoin market value rose an average of about 15% in a 10-week window.
Under their baseline estimate, a 1 basis point rise in deposit rates was followed by 10-week growth of about 12%. A second method, which exploits banks passing on a much larger share of Fed rate increases once the federal funds rate is above about 3%, put the figure near 6%. That method did not predict moves in the rest of the crypto market, a check the authors used to rule out a broad crypto cycle.
The response was larger for Circle’s USDC than for Tether’s USDT: the baseline estimate trimmed about 5% from USDC’s 10-week growth, against roughly 2% for USDT. The authors attribute the gap to differing user bases: USDC skews toward U.S. institutions and DeFi participants, USDT toward offshore activity and developing economies.
The Caveats
“Growth slows but does not necessarily reverse,” the authors wrote. The statistical strength of their second method, a first-stage F-statistic of 9.78, fell just below the conventional benchmark of 10, “suggesting some instrument weakness.” The sample covers one high-rate period, 2022 to 2025, and the aggregate data can’t show which holders switched or which banks were affected. Because issuers reinvest the money, a move into stablecoins could shift deposits between banks rather than shrink the total, they wrote.
The results also describe a market where stablecoins pay holders nothing. “A small but growing segment of yield-bearing stablecoins and tokenized money market funds may alter the substitution margin over time,” the paper said.
The Yield Debate
The paper arrives during a policy debate over stablecoin rewards. The GENIUS Act bars issuers from paying interest, but banks have argued that rewards offered through third-party platforms could draw money out of deposits. In September, the Federal Reserve proposed treating yield routed through an issuer’s affiliates or other connected outside parties as presumptively barred.
Ahmed and Aldasoro wrote that banks “retain some influence over the pace of that adoption through deposit pricing.” For regulators, they suggested weighing whether part of stablecoin reserves should sit in bank deposits, which could cushion bank funding but pile large uninsured deposits into a few banks, and whether issuers may pay holders at all.
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