Banks Worried About Stablecoin Inflows Find a Powerful Counterweight in Traditional Savings Rates

Commercial lenders concerned about losing retail and corporate customers to digital assets may already possess a potent counterweight: the interest rate offered on traditional savings accounts. That is the central finding of a new working paper published by the Bank for International Settlements (BIS), the Basel-based institution that serves as a global hub and bank for central banks worldwide.

Analyzing weekly United States data spanning from January 2019 through June 2025, BIS economist Iñaki Aldasoro and Rashad Ahmed of the Andersen Institute for Finance and Economics discovered a clear inverse relationship. According to their empirical research, the pace of stablecoin market capitalization growth visibly slows down when traditional commercial banks raise their deposit rates, giving legacy financial institutions a tangible lever to retain liquidity.

The research sheds new light on the evolving competitive dynamics between traditional fiat banking systems and the rapidly expanding decentralized finance ecosystem. As stablecoins cement their role as a primary medium of exchange and a store of value within the digital asset economy, commercial banks have increasingly voiced concerns over potential deposit flight. However, the BIS working paper suggests that the traditional banking sector is far from powerless in this tug-of-war for capital.

To understand the mechanics of this relationship, the researchers examined how stablecoin growth fluctuates relative to traditional savings yield adjustments. In a typical ten-week window within the dataset utilized by the authors, the overall stablecoin market capitalization expanded by approximately 15%. When banks implemented a modest one-basis-point increase in their deposit rates—a historically significant weekly movement for sluggish savings rates that typically adjust very slowly—that projected growth rate was curtailed to roughly 12% under the authors’ baseline econometric estimate.

When applying a secondary methodological approach specifically designed to isolate direct cause and effect from mere correlation, the estimated growth rate of stablecoins dropped even further, down to about 6%. The data indicates that while stablecoins have demonstrated remarkable resilience and an ongoing trajectory of adoption, rising deposit rates significantly brake the velocity of that expansion.

Isolating causation from simple coincidence required the authors to identify and exploit a unique structural quirk in traditional banking behavior. Historically, retail and commercial lenders largely keep their savings rates flat or barely budge them until the federal funds rate crosses a specific threshold, typically hovering around 3%. Once the benchmark rate surpasses this critical level, lenders begin to reprice their savings products much faster to compete for liquidity. By leveraging this behavioral threshold as a natural experiment, the researchers were able to establish a more rigorous causal link between bank pricing strategies and stablecoin growth.

Interestingly, the empirical link between rising savings rates and slowing digital asset adoption was notably stronger for Circle’s USDC than for Tether’s USDT. The study’s authors attribute this divergence to USDC’s significantly closer ties, regulatory alignment, and integration with U.S.-based users and financial infrastructure. Because USDC operates within a framework heavily focused on compliance and Western financial markets, its user base may be more sensitive to domestic interest rate fluctuations than the more globally fragmented user base of USDT. Ultimately, the paper concludes that traditional banks "retain some influence over the pace of that adoption through deposit pricing."

Like any empirical economic research, these findings come with important caveats. Working papers reflect the individual analyses and views of their respective authors rather than an official policy stance or consensus of the Bank for International Settlements itself. Furthermore, the researchers’ sample period covers a singular, distinct high-interest-rate monetary cycle during which major stablecoins generally did not pay direct interest or yield to their end-holders.

Looking ahead, the authors noted that financial regulators must carefully weigh critical future policy questions. Specifically, authorities should consider whether stablecoin issuers will ultimately be permitted to pay direct yields to token holders, as well as evaluate the complex trade-offs associated with potential regulatory mandates requiring issuers to maintain a substantial portion of their underlying reserves directly in traditional bank deposits.

This academic inquiry arrives as a lively and high-stakes debate unfolds in Washington over the future regulatory landscape for digital assets. Traditional commercial banking institutions have lobbied fiercely behind the scenes to keep stablecoin yield off the table, arguing that allowing digital tokens to pay interest would strip banks of their competitive advantage and accelerate systemic deposit outflows. This intense lobbying effort loomed large over the political maneuvering surrounding the Clarity Act’s failed Senate vote.

At the same time, federal regulatory bodies including the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the U.S. Department of the Treasury are actively drafting comprehensive rules to implement the GENIUS Act. Signed into law by President Donald Trump in July of last year, the GENIUS Act effectively established a formal federal legal framework for stablecoins in the United States, setting clear rules of the road for their issuance, operational use, and custody standards ahead of its formal implementation slated for January.

The Bank for International Settlements has a long history of scrutinizing stablecoins and the broader cryptocurrency landscape, frequently publishing research highlighting the systemic implications of digital assets. As early as 2021, the institution published reports arguing that the rapid proliferation of blockchain-based digital dollars made the development and issuance of central bank digital currencies (CBDCs) an increasingly urgent priority for global monetary authorities. Subsequently, a comprehensive 2023 BIS survey warned that widespread adoption of privately issued stablecoins could pose significant structural threats to global financial stability if left unchecked.