A BIS working paper puts a dent in the narrative that stablecoin growth equals payment adoption. Using weekly U.S. data from January 2019 to June 2025, the paper finds that a one-basis-point increase in the average deposit rate is followed by a decline in stablecoins’ cumulative market-cap growth over the next ten weeks, from an average of about 15% to about 12%. Note that this is slower growth, not a decline in market capitalization. That distinction matters.
My takeaway is that these findings are worth watching—not because they predict a ceiling for stablecoins, but because they suggest that some of the capital behind stablecoin growth competes directly with bank deposits. Interest-rate spreads anchor this kind of capital: when deposit rates rise, the opportunity cost of holding stablecoins increases, slowing the pace at which new funds flow in. The paper also shows that USDC responds more strongly to interest rates than USDT, but the authors do not offer a causal explanation. I infer that this may be related to how reserve income is distributed and to the composition of holders, particularly institutional holders. But that is only an inference, not something the paper confirms; it remains to be tested.
For readers, this means stablecoin market capitalization should not be viewed solely through the lens of on-chain payment narratives. Three conditions are more worth tracking: first, the path of U.S. deposit rates—if rates continue to fall, the restraining mechanism described in the paper should weaken; second, whether the divergence in market-cap growth between USDC and USDT persists—if it disappears, the explanation based on interest-rate sensitivity may need to be revised; and third, whether the share of on-chain transfers used for payments can rise independently of interest-rate changes. If it can, that would be closer to evidence of genuine growth in usage.
The limits of the evidence are also clear: the paper’s sample covers only one high-interest-rate cycle, and the authors explicitly state that it cannot establish that total bank deposits or lending have declined. So this is better understood as a clue to a possible mechanism, not a conclusion.
Sources:
PANews (originally published 10-17 at 20:12 Beijing time)
https://www.panewslab.com/zh/articles/01a149c7-597f-720f-8236-768daacf0fdb
CoinDesk (originally published 10-17 at 20:00 Beijing time)
https://www.coindesk.com/business/2026/10/14/banks-could-slow-stablecoin-growth-by-paying-savers-more-bis-paper-finds
My takeaway is that these findings are worth watching—not because they predict a ceiling for stablecoins, but because they suggest that some of the capital behind stablecoin growth competes directly with bank deposits. Interest-rate spreads anchor this kind of capital: when deposit rates rise, the opportunity cost of holding stablecoins increases, slowing the pace at which new funds flow in. The paper also shows that USDC responds more strongly to interest rates than USDT, but the authors do not offer a causal explanation. I infer that this may be related to how reserve income is distributed and to the composition of holders, particularly institutional holders. But that is only an inference, not something the paper confirms; it remains to be tested.
For readers, this means stablecoin market capitalization should not be viewed solely through the lens of on-chain payment narratives. Three conditions are more worth tracking: first, the path of U.S. deposit rates—if rates continue to fall, the restraining mechanism described in the paper should weaken; second, whether the divergence in market-cap growth between USDC and USDT persists—if it disappears, the explanation based on interest-rate sensitivity may need to be revised; and third, whether the share of on-chain transfers used for payments can rise independently of interest-rate changes. If it can, that would be closer to evidence of genuine growth in usage.
The limits of the evidence are also clear: the paper’s sample covers only one high-interest-rate cycle, and the authors explicitly state that it cannot establish that total bank deposits or lending have declined. So this is better understood as a clue to a possible mechanism, not a conclusion.
Sources:
PANews (originally published 10-17 at 20:12 Beijing time)
https://www.panewslab.com/zh/articles/01a149c7-597f-720f-8236-768daacf0fdb
CoinDesk (originally published 10-17 at 20:00 Beijing time)
https://www.coindesk.com/business/2026/10/14/banks-could-slow-stablecoin-growth-by-paying-savers-more-bis-paper-finds