A new working paper from the Bank for International Settlements (BIS), titled 'Are stablecoins and bank deposits substitutes?', explores the competitive relationship between traditional bank deposits and reserve-backed stablecoins. Authors Rashad Ahmed and Iñaki Aldasoro analyzed US market data from January 2019 to June 2025.
During the study period, stablecoin market capitalization grew from under $5 billion to over $220 billion. The research indicates that a 1 basis point increase in bank deposit rates correlates with approximately 3 percentage points less growth in stablecoin market cap over a 10-week window, based on ordinary least squares estimates.
The impact of rising deposit rates is more pronounced for USDC, which experienced about 4.8 percentage points less growth per 1 basis point increase. The study notes that this trend extends to stablecoins used in decentralized finance (DeFi) protocols, while other crypto assets remain unaffected by bank deposit rates.
The authors identified a nonlinear effect that becomes significant when the federal funds rate exceeds approximately 3%. At this threshold, the lack of yield on stablecoins compared to interest-bearing bank deposits becomes a structural disadvantage, allowing the banking sector to influence stablecoin demand through pricing.
