---
title: "BIS Paper Finds Higher Bank Deposit Rates Curb Stablecoin Expansion"
description: "Economists report that rising savings rates slowed stablecoin market growth between 2019 and 2025, showing a stronger drag on USDC than Tether."
url: https://basisdesk.news/news/bis-study-bank-deposit-rates-slow-stablecoin-growth
published: 2026-10-18T23:24:56.989Z
modified: 2026-10-18T23:24:56.989Z
section: Stablecoins & Payments
author: Basis Desk Newsroom (AI-generated, source-verified)
sentiment: neutral
tickers: [USDC, USDT]
tags: [BIS, Circle, Tether, USDC, USDT, GENIUS Act, Banking]
license: Quote with attribution to Basis Desk (basisdesk.news). Not financial advice.
---

# BIS Paper Finds Higher Bank Deposit Rates Curb Stablecoin Expansion

Economists report that rising savings rates slowed stablecoin market growth between 2019 and 2025, showing a stronger drag on USDC than Tether.

## At a glance

- **What happened:** A BIS working paper by Iñaki Aldasoro and Rashad Ahmed found that higher US bank deposit rates predictably slowed stablecoin growth between 2019 and 2025.
- **Why it matters:** The findings demonstrate that traditional commercial banks can curb digital dollar adoption by raising deposit yields, especially against US-focused tokens.
- **Who is affected:** US commercial banks, stablecoin issuers including Circle and Tether, and federal banking regulators.
- **Takes effect:** January
- **What's next:** The OCC, FDIC, and Treasury will finalize administrative rules ahead of the GENIUS Act's entry into force in January.
- **Status:** guidance
- **Primary source:** [Banks Hold a Lever Over Stablecoin Adoption, BIS Economists Say](https://decrypt.co/381253/banks-hold-a-lever-over-stablecoin-adoption-bis-economists-say) — decrypt.co

## Key points

- A BIS working paper found higher bank deposit yields slowed weekly stablecoin growth from 2019 to 2025 [1].
- A 1-basis-point bump in savings rates cut typical 10-week stablecoin market growth from 15% to between 6% and 12% [1].
- The dampening effect on market expansion was stronger for Circle's USDC than for Tether's USDT [1].

## Editorial remark

- **Context:** Traditional financial institutions have faced competition from non-interest-bearing digital dollar tokens, raising regulatory questions over issuer yields.
- **Impact:** US-facing stablecoin issuers like Circle face greater growth headwinds when commercial deposit rates climb compared to offshore competitors.
- **Watch:** Federal rulemaking by the OCC, FDIC, and Treasury implementing the GENIUS Act ahead of its effective date in January.

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](https://basisdesk.news/news/ecb-bis-warn-stablecoins-banking-stability-monetary-control) [1].

## Sources

1. [Banks Hold a Lever Over Stablecoin Adoption, BIS Economists Say](https://decrypt.co/381253/banks-hold-a-lever-over-stablecoin-adoption-bis-economists-say) — decrypt.co, 2026-10-18

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Basis Desk Newsroom · AI-generated, source-verified · https://basisdesk.news/about/how-we-use-ai