9h05 ▪ 4 min read ▪ by Fenelon L.
Summarize this article with:
A slight increase in interest rates on bank deposits could slow the growth of stablecoins. This is the finding of a study by the Bank for International Settlements (BIS), which highlights competition between bank savings and these cryptocurrencies pegged to traditional currencies. However, the effect varies depending on the players: Circle’s USDC appears more sensitive to this competition than Tether’s USDT.
In Brief
- A one basis point increase in deposit rates reduces stablecoin growth over ten weeks, from 15% to 12% in the main estimate, and down to 6% in an alternative estimate.
- USDC reacts more than USDT, especially due to its closer ties with American users.
- The study neither proves deposit outflows nor credit contraction. It also highlights the limits of an analysis conducted during a period of high rates.
Higher Savings Rates to Slow Stablecoins
The question of the links between banks and stablecoins continues to fuel debate. Tether already contested, at the end of August, the BIS’s reading on tokenized deposits. This time, the institution moves on to data analysis with a study by Rashad Ahmed and Iñaki Aldasoro.
The researchers studied American weekly data from January 2019 to June 2025. They notably took into account policy rates, bond yields, the dollar, and stock market volatility.
Their finding is clear: a one basis point increase, or 0.01 percentage point, reduces stablecoin growth over ten weeks from about 15% to 12%. Another estimate, which adjusts for banks’ reactions in setting their rates, brings this growth to about 6%.
Why? The rates offered by banks do not mechanically follow those of the central bank. They change little when rates remain low, then adjust more strongly beyond a certain threshold.
The researchers use this difference to measure the effect of rates on stablecoins. Their results hold up to several tests, including excluding the Silicon Valley Bank episode.
USDC and USDT, Different Sensitivity to Bank Rates
The study also highlights a difference between the two main stablecoins. Circle’s USDC reacts more to changes in deposit rates than Tether’s USDT. The researchers attribute this gap mainly to Circle’s proximity to American users.
The results also do not seem to reflect a simple overall trend in the crypto market. An additional test does not show the same link between the instrument used by the researchers and the growth of other cryptocurrencies.
Furthermore, a Federal Reserve note explains that funds placed in stablecoins can return to the banking system in the form of deposits held by issuers. Deposits therefore do not necessarily disappear, but their distribution changes. Banks may nonetheless have to hold more liquid assets if they depend on more volatile funding.
The Study’s Limits and Open Questions
However, caution is needed not to draw excessive conclusions. The study does not demonstrate either an actual decrease in deposits or a credit contraction. In addition, it covers only one episode of high rates. Yield-bearing stablecoins and tokenized money market funds could also change this competition by directly offering a return to their holders.
On the regulatory side the Federal Reserve proposed at the end of September a two-day deadline to reimburse stablecoin holders. In January, the head of Bank of America also mentioned the risk of several thousands of billions of dollars leaving bank deposits.
In essence, banks have a simple lever to remain competitive: better remuneration of savings. The competition with stablecoins therefore relies not only on technology but also on the yield offered to liquidity holders.
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Fenelon L.
Passionné par le Bitcoin, j'aime explorer les méandres de la blockchain et des cryptos et je partage mes découvertes avec la communauté. Mon rêve est de vivre dans un monde où la vie privée et la liberté financière sont garanties pour tous, et je crois fermement que Bitcoin est l'outil qui peut rendre cela possible.
DISCLAIMER
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.