BIS Paper Finds Higher Bank Deposit Rates Curb Stablecoin Expansion

Higher commercial bank deposit rates directly slow the pace of stablecoin adoption, according to a working paper authored by Bank for International Settlements economist Iñaki Aldasoro and Rashad Ahmed of the Andersen Institute for Finance and Economics ¹. Examining weekly US financial data from January 2019 through June 2025, the researchers found that traditional savings yields provide commercial lenders with a practical tool to counter stablecoin outflows ¹.

During a standard 10-week span across the studied period, stablecoin capitalization expanded by approximately 15% ¹. The researchers found that a 1-basis-point increase in bank deposit rates reduced this growth rate to roughly 12% in their baseline calculation ¹. Under an alternative analytical model isolating causality, that expansion fell to about 6% ¹. While overall stablecoin issuance continued to increase, higher bank deposit payouts consistently curbed the velocity of market growth ¹.

Disparate Effects on Major Tokens

The dampening effect proved notably stronger on Circle's $USDC than on Tether's $USDT, a divergence the authors linked to USDC's deeper integration with US users ¹. The paper observed that commercial lenders repriced deposit products substantially faster once the Federal Reserve's policy rate crossed roughly 3% ¹. At the time of writing, USDT traded near parity at $0.9988 amid broader market liquidity.

The economists argued that policymakers must consider whether stablecoin issuers should be permitted to offer yield directly to tokenholders, as well as the risks of requiring issuers to hold reserves in commercial bank deposits ¹. Yield restrictions remain an active point of contention in Washington, influencing the previous defeat of the Clarity Act in the US Senate ¹. Meanwhile, federal agencies including the Treasury, OCC, and FDIC are preparing implementation standards for the GENIUS Act, which established federal stablecoin guidelines when signed by President Donald Trump in July of the previous year ¹. This institutional intersection mirrors previous discussions where the ECB and BIS Warn Stablecoins Challenge Monetary Control and Banking Stability ¹.