Banks vs Stablecoins: The Interest Rate War Is Real
BIS just dropped research showing banks have a weapon against stablecoin growth — and it's simpler than you think.
Key data (Jan 2019 - Jun 2025):
• 1 basis point increase in bank deposit rates = stablecoin market cap growth drops from ~15% to 12% over 10 weeks
• Translation: Better savings rates pull liquidity OUT of stablecoins
Why this matters:
Most stablecoins pay zero yield. If your bank account suddenly offers 4-5% APY, where's your idle capital going? Back to TradFi.
This isn't theory — it's observable competition for the same pool of funds. Stablecoins thrive in low-rate environments. When banks flip the script and offer competitive yields, the arb closes fast.
Bottom line: If central banks keep rates elevated or banks get aggressive with deposit products, expect stablecoin growth to slow. The liquidity war between DeFi and TradFi is heating up — and interest rates are the battlefield.
Research by Rashad Ahmed & Iñaki Aldasoro at BIS
BIS just dropped research showing banks have a weapon against stablecoin growth — and it's simpler than you think.
Key data (Jan 2019 - Jun 2025):
• 1 basis point increase in bank deposit rates = stablecoin market cap growth drops from ~15% to 12% over 10 weeks
• Translation: Better savings rates pull liquidity OUT of stablecoins
Why this matters:
Most stablecoins pay zero yield. If your bank account suddenly offers 4-5% APY, where's your idle capital going? Back to TradFi.
This isn't theory — it's observable competition for the same pool of funds. Stablecoins thrive in low-rate environments. When banks flip the script and offer competitive yields, the arb closes fast.
Bottom line: If central banks keep rates elevated or banks get aggressive with deposit products, expect stablecoin growth to slow. The liquidity war between DeFi and TradFi is heating up — and interest rates are the battlefield.
Research by Rashad Ahmed & Iñaki Aldasoro at BIS