Higher Savings Rates Can Slow Stablecoin Growth, BIS Working Paper Finds

Traditional banks worried about losing customer deposits to the booming stablecoin market may already possess a powerful counterweight: the humble interest rate on a savings account.

That is the core finding of a new working paper published by the Bank for International Settlements (BIS), the Basel-based institution that acts as a bank for the world’s central banks. By analyzing weekly U.S. 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 measurable link between traditional banking yields and the velocity of digital asset adoption. Specifically, the researchers found that the growth rate of stablecoins noticeably slows down when traditional financial institutions raise their deposit rates.

The implications of the paper touch on an ongoing debate in Washington and global financial capitals regarding the intersection of traditional banking and the digital asset economy. As stablecoins have grown from a niche cryptocurrency trading tool into a multi-billion-dollar sector used for cross-border payments and value storage, policymakers have increasingly scrutinized their potential to siphon liquidity away from commercial banks.

According to the BIS working paper, the relationship between traditional yields and stablecoin expansion is statistically significant. The research demonstrates that stablecoin market capitalization historically grew by roughly 15% over a typical 10-week span within the analyzed sample period. However, when traditional banks implemented a one-basis-point bump in deposit rates—a sizable weekly move given the typically slow-moving nature of retail savings rates—that growth rate was reined in. Under the authors’ baseline estimate, the growth dropped to approximately 12%. When utilizing a second methodological approach specifically designed to isolate direct cause and effect from mere correlation, the growth figure fell further to about 6%.

The data suggests that while stablecoins have maintained their upward trajectory overall, traditional banks are not entirely powerless. Higher yields on conventional savings accounts provide a tangible incentive for retail and institutional customers to keep their capital within the traditional banking system rather than migrating it into digital tokens.

To separate genuine causation from coincidence, the study’s authors capitalized on a structural quirk in how commercial banks typically behave. Historically, retail lenders are sluggish when it comes to raising savings rates during periods of monetary tightening. In fact, banks tend to barely adjust their savings rates upward until the federal funds rate crosses a threshold of roughly 3%. Once that benchmark is cleared, however, lenders begin repricing their deposit products much more rapidly. By leveraging this behavior as an analytical lens, the researchers were able to observe how capital flows responded dynamically to shifts in bank yields.

The research also uncovered variations among different digital assets. The link between rising bank deposit rates and slowed growth was found to be notably stronger for Circle’s USDC than for Tether’s USDT. The study’s authors attribute this divergence to USDC’s closer operational ties and higher adoption rates among U.S.-based users, who have more direct access to domestic banking alternatives and traditional yield-bearing products. Ultimately, the paper concludes that traditional banks "retain some influence over the pace of that adoption through deposit pricing."

Like any economic study, these findings come with important caveats. The working paper reflects the independent views of the authors rather than an official stance of the BIS itself. Furthermore, the data sample covers a single, highly specific high-rate monetary cycle during which prominent stablecoins typically did not pay yield directly to their holders.

The researchers noted that future regulatory frameworks should carefully weigh whether stablecoin issuers should be permitted to pass yield on to holders. Regulators must also consider the broader systemic trade-offs of requiring issuers to maintain a significant portion of their underlying reserves directly in commercial bank deposits.

This economic debate is already playing out in real time in Washington, D.C. Traditional banking lobbies have actively fought to keep stablecoin yield off the table, arguing that allowing digital token issuers to offer attractive interest rates could trigger destabilizing bank runs by drawing massive amounts of deposits out of the traditional lending sector. This intense lobbying effort loomed large over the recent legislative battles surrounding the Clarity Act, which faced a stalled vote in the Senate.

Meanwhile, federal regulatory agencies including the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Department of the Treasury are deep into the process of drafting and finalizing 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 framework for stablecoins in the United States, setting clear rules of the road for their issuance, operational use, and custody.

The BIS itself has a long history of scrutinizing stablecoins and the broader cryptocurrency ecosystem. Back in 2021, the institution published reports arguing that the rapid proliferation of blockchain-based digital dollars made the development of central bank digital currencies (CBDCs) an urgent priority for sovereign monetary authorities. Additionally, a comprehensive 2023 BIS survey warned that if stablecoins were to achieve widespread global adoption, they could pose structural threats to international financial stability by fragmenting liquidity and creating systemic vulnerabilities during periods of market stress.