Higher US bank deposit rates slow USDC growth more than USDT, BIS study finds
Bank rates shape stablecoin competition differently
A study released by the Bank for International Settlements (BIS) on October 13 finds that when US bank deposit rates rise, growth in the stablecoin USDC slows more than growth in USDT. A stablecoin is a digital token pegged to the US dollar. The researchers found that for every one-basis-point increase in deposit rates, cumulative USDC growth fell about 4.8% over ten weeks, while USDT growth fell only 1.9%. This means USDC holders appear more likely to move their funds to banks when deposit rates improve, compared to USDT holders.
What the BIS model shows
Researchers Rashad Ahmed and Iñaki Aldasoro analyzed weekly data from January 2019 through June 2025. The paper's first version appeared on March 24, and the full October edition was published afterward. The study measured deposit rates by averaging six national savings and money-market account series. It is not the same as the Federal Reserve's policy rate or any single high-yield bank account. For stablecoins overall, the baseline estimate showed about 2.8% less cumulative growth per basis point of deposit repricing. A second statistical model produced a larger figure of 9.1% less growth, though the authors noted this estimate had limited evidence due to only one high-rate episode in the data. The researchers interpret the stronger USDC response as consistent with its closer ties to US institutional and decentralized finance users, who may compare bank deposits and stablecoin balances more directly. They associate USDT's weaker response with its offshore and developing-economy use.
Exchange rewards add another layer
Stablecoin returns also depend on where holders keep their tokens. The BIS published a June bulletin examining how exchanges pay stablecoin holders. Two models were identified: reserve-based remuneration, where exchanges pass on income from the issuer's reserves, and activity-based remuneration, where payments are tied to lending, trading, or other activity. Coinbase was used as an example of the reserve-based model. Its USDC Rewards program pays eligible customers based on policy and reserve yields rather than lending customer funds. To qualify, users must hold at least $1 of USDC, be in an eligible region, and meet trade eligibility requirements. In some regions, including the US and UK, a Coinbase One membership is also required. Rates vary by country, account type, and ongoing experimentation, and Coinbase can change or discontinue the program. Binance was cited as an example where yields were more exposed to crypto market activity.
What the evidence supports and what remains unclear
The study clearly shows that higher bank deposit rates correlate with slower stablecoin growth in its sample period. The issuer-level difference — a stronger estimated response for USDC than USDT — is supported by the data but remains an interpretation rather than a proven cause. The data cannot identify which individual holders switched accounts or which specific banks were involved. The authors also flagged weakness in their instrumental-variable model, noting the first-stage F-statistic fell below the conventional threshold of 10. Checks for events such as the Silicon Valley Bank collapse and major crypto market moves retained the negative relationship, but the magnitude of the effect depends on which model and sample are used.
Why this matters for stablecoin forecasts
The findings suggest that applying a single deposit-rate assumption to all stablecoins can mask different competitive pressures between issuers. Exchange reward programs further complicate the picture, since the return a holder earns depends on both bank deposit rates and platform-specific terms. The historical estimates provide a useful framework for adoption forecasts, but today's bank-versus-platform comparison requires new data to establish how these forces interact in the current rate environment.
Sources
Newisty Editorial Team covers technology, cryptocurrency, digital products, online platforms, developer tools and the wider digital economy. Our content is researched from official sources, company announcements, public documentation, market data and other primary or reputable sources. Articles are reviewed and edited before publication for clarity, accuracy and useful context.
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