Higher interest payments on bank deposits may slow demand for stablecoins, according to an October working paper published by the Bank for International Settlements. The findings suggest deposit pricing remains a competitive lever for banks, without establishing that stablecoin adoption drains the banking system's total deposits.

Researchers Rashad Ahmed and Iñaki Aldasoro analyzed weekly U.S. data from January 2019 through June 2025. Their baseline estimate associates a one-basis-point increase in deposit rates—0.01 percentage points—with roughly three percentage points less cumulative stablecoin market-capitalization growth over ten weeks.

Against the sample's average ten-week growth of about 15%, that implies growth near 12%, not an outright contraction. The analysis controls for factors including bitcoin prices, Treasury yields and broader financial conditions.

A stronger response for USDC

The estimated response was larger for USDC than USDT. The authors interpret that difference as consistent with USDC's closer connection to U.S. users who can choose between bank deposits and stablecoins.

A separate instrumental-variable approach produced a larger estimated slowdown, but its instrument showed some weakness. The baseline relationship also cannot automatically be read as causal: banks may adjust rates in response to stablecoin competition.

What the study does not show

The research uses aggregate data and cannot identify which holders switch or which banks are affected. Its sample covers only one high-rate episode and a market where stablecoins predominantly paid no interest directly to holders.

For issuers and payment developers, the implication is conditional: stablecoin demand can depend on competing savings returns, not just blockchain utility. Yield-bearing tokens and tokenized money-market funds could change that relationship.