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

According to Bank for International Settlements (BIS) Working Paper No. 1382, BIS economists Iñaki Aldasoro and Rashad Ahmed of the Andersen Centre for Financial and Economic Studies published a study examining whether stablecoins and bank deposits act as substitutes. Using U.S. weekly data from January 2019 through June 2025, the study applies the local projection method to estimate how stablecoin market capitalization responds to changes in deposit interest rates. The results indicate that rising deposit interest rates forecast a deceleration in stablecoin growth. In the context of an average ten-week stablecoin growth of 15%, OLS estimates indicate that each 1-basis-point increase in deposit rates reduces the growth rate by approximately 3 percentage points, bringing it down to around 12%. By leveraging the nonlinear dynamic where bank deposit pricing becomes more responsive once the federal funds rate surpasses approximately 3% as an instrumental variable, the estimated effect expands to roughly 9 percentage points, pushing the growth rate down to about 6%. Placebo tests on non-stablecoin cryptocurrency assets reveal no comparable effects.