A 1-basis-point increase in US bank deposit rates trims the average 10-week growth of stablecoins from about 15% to about 12%, according to a working paper from the Bank for International Settlements (BIS). A second estimation method designed to isolate cause and effect puts the impact roughly three times higher, leaving growth at about 6%.

The baseline estimate implies a decline of roughly 3 percentage points in the 10-week growth — how fast the market value of stablecoins is expanding — for every basis point, one hundredth of a percentage point, of deposit repricing. Growth slowed in response but remained positive.

USDC sheds 4.8 percentage points, USDT 1.9

Working Paper 1382 was written by Iñaki Aldasoro, an economist at the BIS, and Rashad Ahmed of the Andersen Institute for Finance and Economics, and was published on October 13. The study draws on weekly US data from January 2019 to June 2025, a period during which the market value of stablecoins expanded from less than $5 billion to more than $220 billion.

The relationship was stronger for Circle's USDC than for Tether's USDT. USDC lost about 4.8 percentage points of 10-week growth per basis point, while USDT lost 1.9 percentage points. The authors attribute the gap to USDC's closer ties to US depositors. The effect was observed for stablecoins supplied to DeFi protocols but not for crypto assets outside the stablecoin category.

Banks pass through very little of any rate change to savers when the federal funds rate is below about 3%. Above that level, deposit pricing becomes aggressive, and the authors used that kink as an instrument to identify causation. When interest rates are near zero, savers earn roughly the same from a bank deposit as from a token that pays nothing; as rates rise, deposits pay more while the token still pays nothing, widening the gap.

Reserve-backed stablecoins are partial substitutes for deposits, the paper concludes. Banks "retain some influence over the pace of that adoption through deposit pricing," the authors wrote. The result puts a number on the question at the center of stablecoin rulemaking on both sides of the Atlantic: whether tokens compete with bank deposits, and how strongly.

Authors urge regulators to weigh issuer yield

The paper outlines two levers for regulators. The first is whether issuers may pay yield to holders. The second is a requirement that issuers hold part of their reserves as bank deposits, which the authors said carries both advantages and drawbacks.

That second rule is already under pressure in Europe. The European Central Bank and the 27 national central banks of the EU have urged Brussels to scrap the requirement for issuers to keep at least 30% of reserves in bank deposits, or 60% for significant tokens, under MiCA, the EU's Markets in Crypto-Assets framework, Cryptopolitan reported on September 22.

In the US, bank lobbyists want stablecoin yield kept out of the rules, and the GENIUS Act, the federal stablecoin statute, takes effect in January. The paper points to the key pressure point: US stablecoins pay no interest to holders. As it stands, each side of the Atlantic is actively weighing one of the two levers the authors identify.

Circle, whose USDC supply stands at about $72.5 billion, defended its revenue split on October 16, Cryptopolitan reported. Distribution partners and transaction costs accounted for about 59% of its roughly $1.4 billion first-half 2026 revenue, leaving about 7 cents of net profit per dollar of revenue. Rival Open USD is courting the same distribution partners, promising to return profits from reserves.

The paper notes that the authors' views are not necessarily those of the BIS. The study covers only one period of high interest rates, 2022 to 2025, during which stablecoins paid holders no interest. It also does not prove that stablecoin growth has drained deposits from banks or reduced how much banks lend.