A new working paper from the Bank for International Settlements (BIS) concludes that stablecoins and traditional bank deposits function as partial substitutes, with higher savings account interest rates corresponding to slower stablecoin growth.
The paper, titled "Are stablecoins and bank deposits substitutes?" was published as BIS Working Paper 1382 on October 13, 2026, by researchers Rashad Ahmed and Iñaki Aldasoro. Their analysis examined weekly US data from January 2019 through June 2025, a period during which stablecoin market capitalization grew from less than $5 billion to more than $220 billion.
Key Findings
Over the study period, stablecoin market cap grew at an average rate of approximately 15% over 10-week intervals. The researchers found that a 1 basis point increase in bank deposit rates corresponded with roughly 3 percentage points less stablecoin market cap growth in a 10-week window, based on ordinary least squares estimates. Using instrumental variables estimates, the measured effect rose to approximately 9 percentage points.
The sensitivity to rate changes differed by stablecoin. USDC showed stronger rate sensitivity, declining about 4.8 percentage points in growth for each 1 basis point rise in deposit rates, while USDT declined 1.9 percentage points.
The Rate Threshold Effect
The research identified a nonlinear relationship tied to the federal funds rate. When rates remained near zero, both bank deposits and stablecoins offered minimal yield to savers. However, once rates climbed above roughly 3%, the gap between interest-bearing deposits and non-yielding stablecoins became more pronounced, amplifying the competitive effect.
Broader Implications
The relationship between bank rates and stablecoin growth extended to stablecoins deployed in decentralized finance protocols, suggesting on-chain activity is influenced by traditional banking conditions. However, the correlation did not apply to non-stablecoin crypto assets.
For policymakers, the research indicates that stablecoin adoption may be closely linked to interest rates set by banks and the federal funds rate, carrying implications for monetary policy and regulation. The structural vulnerability stems from stablecoins being non-yielding assets, making them less attractive when competing financial products offer meaningful returns.
