A working paper from the Bank for International Settlements found that banks may be able to slow stablecoin growth by offering savers higher deposit rates, adding empirical weight to concerns raised by banking executives.
Researchers Rashad Ahmed and Iñaki Aldasoro analyzed weekly data from January 2019 to June 2025, controlling for bitcoin prices, Treasury yields, and broader financial conditions. They discovered that a one basis point increase in average U.S. bank deposit rates predicted slower stablecoin growth, reducing average ten-week growth in stablecoin market capitalization from approximately 15% to 12%.
The researchers found a stronger effect for Circle's USDC than Tether's USDT, which they attributed to USDC's closer ties to U.S. users. Under their preferred estimate, which adjusts for banks raising rates in response to stablecoin growth, the effect was roughly three times larger, slowing growth to about 6%, though the authors noted some methodological limitations.
Banking Sector Concerns
The findings contribute to an ongoing debate about stablecoin adoption's impact on traditional banking. Bank of America CEO Brian Moynihan warned in January that as much as $6 trillion in deposits could move into stablecoins and related products offering returns, potentially reducing lending capacity and raising borrowing costs.
Reserve Placement and Funding Dynamics
The effect is partly linked to how stablecoin issuers place their reserves. According to a December Federal Reserve staff analysis, money placed in stablecoins can return to banks as issuer deposits, changing the composition of banks' funding sources even when total deposits remain unchanged. Larger, uninsured balances could require banks to keep more liquid assets and leave less room for long-term loans.
Paying higher rates to retain customers also increases banks' funding costs. The Federal Reserve analysis suggested banks could target better rates at customers most likely to switch, while maintaining lower rates for less mobile depositors.
Limitations and Future Developments
The BIS paper does not establish net losses of bank deposits or lending. Its sample covers one high-rate episode, and findings may change as yield-bearing stablecoins and tokenized money market funds gain ground.
The researchers concluded that banks "retain some influence over the pace of that adoption through deposit pricing."
