A one-basis-point increase in U.S. bank deposit rates cuts stablecoin market growth over a typical 10-week span from about 15% to as low as 6%, according to a new Bank for International Settlements working paper. The study, published by the Basel-based institution, analyzed weekly U.S. data from January 2019 through June 2025 and was written by BIS economist Iñaki Aldasoro and Rashad Ahmed of the Andersen Institute for Finance and Economics.

The core finding is simple. Stablecoins kept growing when banks paid more on savings. They just grew more slowly. Under the authors' baseline estimate, a one-basis-point deposit rate bump trimmed 10-week growth from roughly 15% to about 12%. Under a second method designed to isolate cause and effect, growth fell to around 6%. Deposit rates move slowly, so a single basis point in a week counts as a sizable shift.

To separate cause from coincidence, the authors exploited a quirk in bank behavior. Lenders barely raise savings rates until the federal funds rate passes about 3%. Above that threshold, they reprice much faster. That discontinuity gave the researchers a way to identify whether deposit pricing genuinely pulls demand away from stablecoins rather than merely moving alongside them.

The effect was stronger for Circle's USDC than for Tether's USDT. The authors attribute the gap to USDC's closer ties to U.S. users, who are the ones actually comparing token balances against domestic savings accounts.

The paper concludes that banks "retain some influence over the pace of that adoption through deposit pricing." Stablecoins are not immune to competition from the traditional system, in other words. They compete with it directly, and price matters.

What does this change for issuers and regulators?

The caveats are real, and the authors flag them. Working papers reflect their views, not necessarily the BIS's. The sample covers a single high-rate cycle, and throughout that period stablecoins paid holders no interest, which removes one obvious counterlever issuers could pull.

That limitation points straight at the regulatory fight in Washington. The authors said regulators should weigh whether stablecoin issuers may pay holders yield, along with the trade-offs of requiring issuers to keep part of their reserves in bank deposits. Both questions go to the heart of how competitive stablecoins can legally become.

Banks have lobbied to keep stablecoin yield off the table, a fight that loomed over the Clarity Act's failed Senate vote. Meanwhile, the OCC, the FDIC, and the Treasury are writing rules to implement the GENIUS Act, which takes effect in January. That law, signed by President Donald Trump in July of last year, effectively legalized stablecoins in the United States and set rules for their issuance, use, and custody.

The BIS has watched this space for years. In 2021 it argued that blockchain-based digital dollars made central bank digital currencies more urgent. A 2023 BIS survey warned stablecoins could threaten financial stability if widely adopted.

For issuers, the operational lesson is that deposit competition is measurable, not theoretical. A U.S.-tethered token like USDC sits closer to the interest-rate front line than a more internationally distributed one like USDT. If the GENIUS Act implementing rules permit issuer-paid yield, that asymmetry could narrow. If they do not, banks keep the pricing lever the paper describes, and the January effective date becomes the first hard test of who can hold it.