BIS Working Paper: Banks Raising Deposit Rates May Slow Stablecoin Growth, with USDC Reacting More Noticeably

PANews October 17 news: The Bank for International Settlements (BIS) has published a working paper titled "Are Stablecoins Substitutes for Bank Deposits?" The study is based on weekly U.S. data from January 2019 to June 2025. After controlling for factors such as Bitcoin prices, Treasury yields, and financial market conditions, it finds that an increase in bank deposit rates is associated with a slowdown in the growth rate of stablecoin market capitalization. According to baseline model estimates, a 1 basis point (0.01 percentage point) increase in the average deposit rate in a single week corresponds to a roughly 3 percentage point reduction in the cumulative growth rate of stablecoin market capitalization over the following ten weeks, from an average level of about 15% to around 12%, rather than a shift of market capitalization into decline. USDC reacts more strongly than USDT. The authors note that the study cannot be used to conclude that total bank deposits or lending have decreas

PANews October 17 news: The Bank for International Settlements (BIS) has published a working paper titled "Are Stablecoins a Substitute for Bank Deposits?" The study is based on weekly U.S. data from January 2019 to June 2025. After controlling for factors such as Bitcoin prices, Treasury yields, and financial market conditions, it finds that an increase in bank deposit rates is associated with a slowdown in the growth rate of stablecoin market capitalization.

According to baseline model estimates, a 1 basis point (0.01 percentage point) increase in the average deposit rate in a single week corresponds to a cumulative growth rate of stablecoin market capitalization over the following ten weeks that is about 3 percentage points lower than the average level of about 15%, at around 12%, rather than a shift in market capitalization to decline. USDC reacts more strongly than USDT.

The authors note that the study cannot be used to conclude that total bank deposits or lending have decreased, and that the sample covers only one high-interest-rate cycle.