Stablecoins are emerging as an alternative to bank deposits, according to new BIS research.
Iñaki Aldasoro, economist at the Bank for International Settlements, and Rashad Ahmed, economist at the Andersen Institute for Finance and Economics, said their findings provide evidence of a substitution effect between stablecoins and deposits.
“We show that stablecoin balances respond to what banks pay depositors,” they said.
The researchers found that higher US deposit rates were associated with slower stablecoin growth between 2019 and 2025.
Their analysis suggests a one basis point increase in deposit rates reduced ten-week stablecoin growth by around three percentage points under baseline estimates.
Alternative estimates designed to address causality concerns indicated an even stronger effect, with stablecoin growth slowing by around nine percentage points over the same period.
According to the paper, the findings support the view that stablecoins compete with deposits along a common portfolio allocation margin, even if they are not yet large enough to cause measurable aggregate deposit outflows from the banking system.
The effect was stronger for Circle’s USDC than for Tether’s USDT, which the authors said was consistent with USDC’s closer links to US depositors and institutional users.
The researchers found no equivalent relationship between deposit rates and the wider cryptocurrency market, suggesting the effect is specific to stablecoins rather than broader crypto market movements.
The authors said the results have implications for both monetary policy and stablecoin regulation, arguing that the pace of stablecoin adoption may depend partly on the rates banks offer savers.
The study comes after the reserve-backed stablecoin market grew from less than $5bn in 2019 to more than $220bn by mid-2025, highlighting the sector’s increasing significance within global financial markets.
