Banks have a weapon against stablecoins, and it isn’t a lobbying budget. It’s the interest rate on your savings account.
A new working paper from the Bank for International Settlements (BIS) finds that when banks pay savers more, stablecoin growth slows. The study suggests the two products compete for the same pool of money.
What the BIS researchers found
The paper is titled “Are stablecoins and bank deposits substitutes?” It was published as BIS Working Paper 1382 on October 13, 2026, and written by Rashad Ahmed and Iñaki Aldasoro.
Their answer to the title question is a qualified yes. The authors conclude that reserve-backed stablecoins act as partial substitutes for traditional bank deposits.
To get there, they worked through weekly US data running from January 2019 through June 2025. That window covers a dramatic stretch for the sector: stablecoin market capitalization climbed from less than $5 billion to more than $220 billion.
Over that period, the average 10-week growth in stablecoin market cap came in at approximately 15%. That figure is the baseline the rest of the findings should be read against.
The headline result: a 1 basis point increase in bank deposit rates lines up with roughly 3 percentage points less stablecoin market cap growth over a 10-week window. A basis point is one hundredth of a percentage point.
That 3 percentage point figure comes from the authors’ ordinary least squares (OLS) estimates. Using instrumental variables (IV) estimates instead, the measured effect rises to about 9 percentage points.
USDC flinches harder than USDT
Not every stablecoin reacts the same way. The effect was notably stronger for USDC, which saw about 4.8 percentage points less growth for each 1 basis point rise in deposit rates.
USDT, by comparison, showed a reaction of 1.9 percentage points.
The research summary characterizes USDC as more closely tied to US institutions.
The pattern also didn’t stop at simple holdings. The findings held for stablecoins deployed in decentralized finance (DeFi) protocols.
Meanwhile, the relationship did not show up for crypto assets outside the stablecoin category. Bank deposit rates had no significant effect on those.
The 3% threshold
One of the more interesting wrinkles involves the broader rate environment. The authors point to a nonlinear effect that kicks in once the federal funds rate climbs above roughly 3%.
When rates sit near zero, a bank deposit and a stablecoin both pay savers roughly nothing. Once rates move meaningfully higher, the gap between an interest-bearing deposit and a non-yielding token becomes harder to ignore.
Why the timing of this research matters
The study’s data window spans the ultra-low-rate years, the tightening cycle that followed, and a period in which stablecoins grew by a factor of more than 40.
The research summary describes this as a pricing mechanism through which the banking industry can influence stablecoin demand.
What this means for stablecoin issuers and investors
The core vulnerability is structural. As the research notes, stablecoins are non-yielding assets for holders.
The DeFi finding matters because it suggests on-chain activity is not insulated from what happens at the bank down the street.
For policymakers, the research summary notes that stablecoin adoption may be closely linked to the interest rates banks offer savers, and that the relationship carries implications for both monetary policy and regulation. The research summary also flags that sharper competition with banks could become a regulatory concern in its own right.
Alongside on-chain metrics and exchange flows, bank deposit rates and the federal funds rate, particularly around that roughly 3% level, now look like meaningful signals for where stablecoin supply may be heading next.
Disclosure: This article was edited by Kaye Quema. For more information on how we create and review content, see our Editorial Policy.