The Invisible Hand: How Bank Rates Shape Stablecoin Adoption

New research from the Bank for International Settlements sheds light on a powerful, yet often overlooked, link between traditional finance and the crypto ecosystem. The study suggests commercial banks hold a form of leverage over the growth trajectory of stablecoins through a conventional tool: deposit interest rates.

Quantifying the Sensitivity

Analyzing weekly U.S. data from early 2019 to mid-2025, the paper examines the relationship between changes in deposit rates and the expansion of the stablecoin market. Under typical conditions, the aggregate stablecoin market cap grew by about 15% over a ten-week period. However, a one basis point increase in deposit rates was associated with a slowdown in this growth to approximately 12% in baseline estimates. Using causal identification methods, the slowdown appears even more pronounced, potentially reducing growth to around 6%.

This indicates that while stablecoin adoption continues, its pace is measurably constrained by the traditional interest rate environment. Among major stablecoins, USDC demonstrated the highest sensitivity to rate changes. The authors attribute this to USDC's closer integration with U.S.-based users and the domestic financial system, making it more directly exposed to conventional monetary policy shifts.

The Bank's Hidden Leverage

The paper concludes that the banking system retains significant "influence" or "leverage" over the speed of stablecoin adoption through its deposit pricing strategies. When banks raise rates to attract funds, some capital that might have flowed into stablecoins remains within the traditional banking sector, dampening crypto-dollar expansion.

  • Core Mechanism: Higher deposit rates increase the attractiveness of holding traditional fiat deposits.
  • Competitive Effect: The competitiveness of non-interest-bearing stablecoins (during the sample period) is reduced relative to yield-generating assets.
  • Policy Implication: This dynamic presents crucial considerations for regulators.

Open Questions for Regulators

The research highlights key issues policymakers must grapple with when designing stablecoin frameworks. The decision of whether to allow stablecoins to pay interest to holders is central, as it directly impacts their competitiveness across interest rate environments. Similarly, rules mandating that stablecoin issuers hold reserves at commercial banks require careful assessment, as such measures could amplify the traditional banking system's influence over crypto markets.

With the U.S. GENIUS Act set to take effect in January, the regulatory landscape for stablecoins is poised for change. This study provides timely empirical insights for that process. The authors note, however, that the analysis covers a single high-interest-rate cycle where stablecoins did not pay interest, and the generalizability of the findings needs further testing under different market conditions.