Skip to content
$BTC$82,273+0.3%$ETH$2,424+0.3%$SOL$104.78+0.8%$XRP$1.30+0.4%$TON$1.780.0%MCap$2.72T+0.5%BTC.D60.3%Fear&Greed59 GreedGas0.11 gwei·1.1 sat/vBNews mood12% bullish
Basis Desk

New from Basis Desk: free Telegram proxies for places where Telegram is blocked or slowed down.Connect in one tap →

Stablecoins & Payments · 1 min read

BIS Working Paper Identifies Stablecoins as Substitutes for Bank Deposits

Researchers found that rising bank deposit yields curbed reserve-backed stablecoin growth, with a more pronounced effect observed on USDC.

Editorial oversight: Julian Mercer, Chief Editor
Neutral
$BTC $82,273 +0.3% $USDC $1.00 0.0% $USDT $0.9989 +0.0%

At a glance

What happened
A BIS working paper found that higher commercial bank deposit rates predict slower market capitalization growth for reserve-backed stablecoins.
Why it matters
The findings show that bank deposit pricing directly impacts stablecoin demand, potentially influencing monetary policy transmission as adoption grows.
Who is affected
Stablecoin issuers, commercial banks, decentralized finance participants, and US dollar depositors.
What's next
No next step announced.
Primary source
bis.org: Are stablecoins and bank deposits substitutes? | Bank for International Settlements

Key points

  • A BIS working paper using data from January 2019 to June 2025 found stablecoins and bank deposits act as partial substitutes.
  • Higher bank deposit rates curb stablecoin growth, demonstrating a stronger contraction effect on USDC than USDT.
  • The substitution relationship held across deposit tiers and DeFi protocols, but was absent in non-stablecoin cryptocurrencies.

A Bank for International Settlements (BIS) working paper concluded that reserve-backed stablecoins function as partial substitutes for bank deposits, with higher commercial deposit yields leading to slower growth in the stablecoin sector 1. Researchers analyzed weekly US market data spanning from January 2019 to June 2025 to evaluate how changes in deposit pricing influence user capital allocation 1.

According to the working paper, banks reprice deposits more aggressively when the federal funds rate surpasses roughly 3% 1. Measuring against an average 10-week stablecoin growth baseline of 15%, ordinary least squares estimates indicated that stablecoin growth slowed by approximately three percentage points per basis point of deposit repricing 1. Instrumental variable estimates suggested an impact approximately three times larger 1. The researchers noted that the deceleration was more pronounced for $USDC than for $USDT, attributing the discrepancy to USDC's closer links to US depositors 1.

Implications for Banking and Monetary Policy

The study accounted for external factors, including Treasury yields, exchange rates, broad financial volatility, and the price of $BTC 1. The substitution dynamics held across varying deposit tiers and extended to stablecoins committed to decentralized finance protocols, but did not emerge when testing non-stablecoin cryptoassets 1. At the time of writing, USDT traded at $0.9989 and USDC held at $1.00 as total crypto market capitalization stood at $2.75 trillion.

The findings show that commercial bank deposit pricing directly influences the expansion of stablecoin capitalization 1. Although the authors clarified that stablecoin growth does not necessarily reduce aggregate bank lending or deposit volumes, widespread adoption could alter bank funding conditions and traditional monetary policy transmission 1. Further analysis on these dynamics links to broader coverage in a BIS paper on bank deposit rates, while related research details how stablecoin payments jumped 45% through September despite shifting supply dynamics.

Questions this story raises

What did the BIS study conclude about stablecoins and bank deposits?
The study found evidence that stablecoins and bank deposits are partial substitutes, with higher bank deposit rates leading to slower growth in stablecoin market capitalization.
Why was the impact larger on USDC than USDT?
The researchers attributed the stronger substitution effect observed in USDC to its closer operational and user connections to US depositors.

Sources

  1. [1] Are stablecoins and bank deposits substitutes? | Bank for International Settlements — bis.org, October 13, 2026

Written by Basis Desk's newsroom system from the primary sources above and machine-verified against them before publication. Market figures marked "at the time of writing" come from live exchange data. Report an error: corrections@basisdesk.news · corrections policy.

Community read
How do you read this story for the assets involved? One vote a day, anonymous.
Be the first to vote
Share X Telegram Bluesky Markdown

The Daily Brief, in your inbox at 07:00 ET

Five stories, the numbers that moved, what to watch. Three minutes. No hype, no advice, unsubscribe in one click.

Not financial advice. Basis Desk publishes information, not recommendations. Crypto assets are volatile and you can lose what you invest.