BIS Study Links Bank Rates to Stablecoin Growth
- A BIS working paper found that higher bank deposit rates slow stablecoin market growth.
- The effect is stronger for Circle’s USDC than Tether’s USDT, attributed to USDC’s closer ties to U.S. users.
- Stablecoin market capitalization typically grew by about 15% over a typical ten-week span, but a one-basis-point increase in deposit rates cut this growth to approximately 12%.
- The study used data from January 2019 through June 2025 and noted that banks influence stablecoin adoption through deposit pricing.
- The GENIUS Act, effective January, sets rules for stablecoins in the U.S., following its legalization by President Donald Trump last year.
Higher bank deposit rates are linked to slower growth in the stablecoin market, with a more pronounced effect on USDC compared to USDT due to its stronger U.S. connections. The GENIUS Act will soon regulate stablecoins in the U.S., impacting their issuance and use.
The BIS paper highlights how banks can affect stablecoin adoption through interest rate adjustments, suggesting regulatory considerations for yield payments by issuers as part of ongoing legislative developments in the U.S.(Source)
