Banks can slow stablecoin growth simply by paying depositors more, BIS research finds

Higher bank deposit rates predict slower stablecoin growth, according to a new working paper published by the Bank for International Settlements⁴. Stablecoins and bank deposits are competing for the same pool of funds, the research finds³. When US banks paid savers more, stablecoins grew more slowly, and the effect was strongest for USDC⁵. Higher interest rates on bank deposits can significantly slow the growth of stablecoins, Yahoo Finance reported of the study, which it framed as making USDC more vulnerable than USDT⁶.

Forex Crunch reported that the paper identifies the gap between what banks pay depositors and what stablecoins offer as the operative variable⁷. Pluang’s summary also put rising bank deposit rates at the centre of the slowdown, and singled out USDC⁸. The BIS published Working Paper 1385, on competing rails for cross-border payments across banks, fintechs and stablecoins, on 19 October¹. It also published a speech the same day on financial resilience in an age of repeated shocks².

Why it matters to investors

If the finding holds, stablecoin supply is a function of bank pricing rather than of crypto demand alone^4,7. That makes the deposit rate a lever over the dollar-token float, and therefore over the Treasury bill demand that backs it, without any regulator issuing a rule^3,4.

It also reframes the competitive question for banks. The research treats the two instruments as rivals for the same funds, which means a bank that raises deposit rates is defending its funding base against tokens as well as against other banks³. The asymmetry the coverage reports, with USDC more sensitive than USDT, suggests the effect runs through holders who treat a stablecoin as a cash substitute rather than as trading collateral^5,6.

What to watch

These are findings in a working paper, which the BIS publishes as research rather than as policy, and the coverage describes a predictive relationship rather than a proven mechanism^4,5.

The first thing to watch is whether the USDC and USDT divergence persists as deposit rates move, since that split is the strongest claim in the reporting^5,6. The second is how the BIS’s own payments framing develops: Working Paper 1385 treats banks, fintechs and stablecoins as competing rails for cross-border payments, which is a wider contest than deposit pricing alone¹. The third is whether banks themselves start citing stablecoin competition when they explain deposit pricing, which would turn a research finding into a stated business reason^3,7.