BIS Research: Rising Deposit Interest Rates Will Drag on Stablecoin Growth, with USDC More Impacted Than USDT

On October 17, according to Bank for International Settlements (BIS) Working Paper No. 1382, BIS economists Iñaki Aldasoro and Rashad Ahmed of the Andersen Institute of Finance and Economics released a study examining whether stablecoins and bank deposits act as substitutes for one another. Using weekly US data from January 2019 to June 2025, the study employs local projections to estimate how stablecoin market capitalization responds to changes in deposit interest rates.

The results indicate that increases in deposit interest rates predict a slowdown in stablecoin growth. Against a backdrop of average stablecoin growth of 15% over a ten-week period, OLS estimates show that a 1-basis-point increase in deposit interest rates reduces the growth rate by approximately 3 percentage points, bringing it down to around 12%. Utilizing the nonlinear feature that banks price deposits more aggressively once the federal funds rate exceeds 3% as an instrumental variable, the estimated effect expands to approximately 9 percentage points, with the growth rate falling to around 6%. Placebo tests on non-stablecoin crypto assets do not reveal a similar effect.