A 1-basis-point increase in US bank deposit rates trims the average 10-week stablecoin growth from about 15% to about 12%, according to a working paper from the Bank for International Settlements.
A second method intended to isolate cause and effect puts the hit at about three times higher, leaving growth at about 6%.
The baseline estimate entails a decline of about 3 percentage points in the 10-week pace for each basis point of deposit repricing. Growth slowed and stayed positive.
USDC sheds 4.8 percentage points to USDT’s 1.9
Working Paper 1382 was authored by Iñaki Aldasoro, an economist at BIS, and Rashad Ahmed of the Andersen Institute for Finance and Economics and was published on October 13. This paper uses weekly US data from January 2019 to June 2025, during which the market value of stablecoins grew from less than $5 billion to more than $220 billion.
For Circle’s USDC, the connection was stronger than for Tether’s USDT. USDC lost about 4.8 percentage points of 10-week growth per basis point and USDT lost 1.9 percentage points.
The authors ascribe the gap to USDC’s closer ties to US depositors. The effect was observed for stablecoins supplied to DeFi protocols but was not observed for crypto assets outside the stablecoin category.
Banks pass through very little of any rate change to savers if the federal funds rate is below about 3%. But above it deposit pricing gets aggressive, and the authors used that kink as an instrument to identify causation.
When interest rates are near zero, savers earn about the same from a bank deposit as from a token that pays nothing. As rates rise, the deposit starts paying more while the token still pays nothing, so the gap grows.
Reserve-backed stablecoins are partial substitutes for deposits, the paper says.
Banks “retain some influence over the pace of that adoption through deposit pricing,” the authors wrote.
Aldasoro and Ahmed tell regulators to weigh issuer yield
The paper gives regulators two levers to pull. One is whether issuers may pay holders yield.
The other is a requirement that issuers keep some reserves as bank deposits, which the authors said has pros and cons.
The rule is already under fire in Europe. The ECB and the 27 national central banks of the EU have urged Brussels to eliminate the requirement for issuers to have at least 30% of reserves in bank deposits or 60% for significant tokens as per MiCA, Cryptopolitan reported on September 22.
US bank lobbyists want stablecoin yield kept out of the rules, and the GENIUS Act takes effect in January. The paper identifies the pressure point that US stablecoins don’t pay any interest to holders.
Circle, with a USDC supply of about $72.5 billion, defended its revenue split on October 16, Cryptopolitan reported. Distribution partners and transaction costs accounted for about 59% of its ~$1.4 billion first-half 2026 revenue, with 7 cents of net profit per dollar of revenue.
Rival Open USD is also courting the same partners, promising to return profits from reserves. The paper says the authors’ views are not necessarily those of the BIS.
The study covers only one period of high interest rates, 2022 to 2025, and stablecoins paid their holders no interest back then. It also doesn’t prove that stablecoins’ growth has pulled money out of banks or cut how much banks lend.
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