A study published by economists linked to the Bank for International Settlements (BIS) reveals that the increase in bank deposit rates acts as a direct brake on the pace of adoption of stablecoins, showing a notably higher sensitivity in assets such as USD Coin (USDC).
Empirical analysis shows how the interest rate policy of the US commercial banking sector retains capital that would otherwise seek liquidity within the crypto ecosystem, reopening the debate on the remuneration of these digital assets.
The correlation between bank deposits and crypto growth
For years there has been debate about the extent to which stablecoins can compete directly with traditional commercial bank money. According to a working paper prepared by economists at the BIS, The growth of stablecoins slows measurably when banks raise interest rates on their deposits.This phenomenon demonstrates that users and institutions respond to conventional capital incentives when balancing their exposure to digital liquidity.
The research covered weekly US market data collected between January 2019 and June 2025. The authors, Iñaki Aldasoro and Rashad Ahmed, identified that over typical ten-week periods, the total market capitalization of the stablecoin sector grew by around 15%. However, an increase of just one basis point in the return on bank savings—a significant movement in weekly deposit series—reduced that rate of expansion to 12% in their baseline estimates.
Under models specifically designed to isolate direct causes and effects, the growth rate contracted even more sharply, settling at around 6%. The market continued to expand in net terms, but at a significantly slower pace, confirming that the opportunity cost of fiat money in bank accounts directly competes with holding stable assets on the blockchain.
The asymmetric behavior between USDC and USDT
The study underscores that this slowdown effect does not affect all issuers equally. Sensitivity to rising interest rates was considerably more pronounced for USD Coin (USDC), issued by Circle, compared to Tether (USDT). The researchers attribute this marked difference to the user base and the geographical distribution of the capital backing and using each token.
USDC maintains much closer operational, regulatory, and commercial ties with investors and entities domiciled in the United States. When interest-bearing accounts at U.S. banks began offering better returns after overcoming the restrictive interest rate environment, corporate and institutional USDC holders found clear incentives to transfer part of their balance to guaranteed, positive-yielding bank deposits.
Conversely, USDT boasts a globally diversified user base, with a strong presence in emerging economies, cross-border markets, and international exchange platforms. For these international users, the interest rate offered by a commercial bank in the United States is less accessible or relevant than the immediate liquidity the asset provides for peer-to-peer trading or currency hedging against volatile local currencies.
The three percent threshold in monetary policy
A key finding of the report lies in the mechanism by which commercial banks pass on central bank decisions to their end customers. Economists observed a discontinuous pattern of behavior: lenders barely raised interest rates on their savings accounts until the official federal funds rate exceeded the 3% threshold.
Once that threshold was surpassed, the shift towards customer deposits accelerated rapidly. It was precisely in this high-interest-rate environment that the relative attractiveness of holding stablecoins without remuneration began to be under pressure. While fiat money in the bank generated predictable flows, dollar-pegged tokens offered no direct reward for simply holding them in a stablecoin. Wallet.
The document points out that this analysis reflects a specific cycle of monetary tightening in which stablecoin issuers were prohibited or restricted from transferring the returns earned on their reserves to end users. This positions the pricing power of bank deposits as a lever that the traditional financial system still uses to modulate the speed of adoption of distributed ledger finance.
The regulatory debate and the institutional framework
The report's findings come at a time when international regulatory frameworks are seeking to define the role of these assets. In the United States, legislative initiatives such as the GENIUS Act, passed to establish clear rules for issuance, custody, and use, coexist with intense debates about whether stablecoin issuers should be allowed to pay their users or whether their reserves should be held entirely in bank custody.
The US banking sector has strongly argued against stablecoins distributing returns to holders, citing risks of financial disintermediation and destabilization of the deposit base that funds productive lending. Meanwhile, cryptocurrency developers maintain that passing on collateral rewards to users democratizes access to short-term sovereign debt returns.
In the European Union context, the MiCA Regulation imposes very clear guidelines on asset-linked tokens and electronic money tokens. MiCA explicitly prohibits issuers of these tokens from granting interest on users' holdings. This provision aims to preserve financial stability and protect consumers, aligning the European framework with strict prudential standards, which you can explore in detail through [link/resource]. Bit2Me Academy.
FAQ
Why do increases in bank interest rates affect stablecoins?
Because they increase the opportunity cost of holding non-interest-bearing digital balances. When traditional savings accounts offer rewards on deposited money, both companies and individuals prefer to keep some of their liquidity in the bank rather than in currency-pegged digital tokens that don't generate returns on passive holding.
Does the MiCA Regulation in Europe allow stablecoins to pay interest?
No. The European regulatory framework MiCA explicitly prohibits issuers of electronic money tokens and asset-linked tokens from offering direct interest or rewards to holders simply for holding the asset, with the aim of safeguarding banking stability and preventing credit disintermediation.
Why has USDC proven more sensitive to these changes than USDT?
Because a significant proportion of users and businesses that use USDC operate within the US jurisdiction or maintain direct access to the US financial system, the increase in local deposit rates allowed these actors to more easily arbitrage their capital into protected banking instruments.
The relationship between traditional banking and distributed ledger assets continues to evolve as macroeconomic cycles test the elasticity of capital. Data confirm that conventional monetary policy still exerts a decisive influence on digital liquidity flows.
With the implementation of regulations such as MiCA in Europe and the advancement of new regulatory schemes in the United States, the interaction between fiat deposits and stablecoins will define the global payments infrastructure in the coming years.
Investing in cryptoassets is not fully regulated, may not be suitable for retail investors due to high volatility and there is a risk of losing all invested amounts.
Generative artificial intelligence tools were used to create this article.
