Skip to content
Blockchain Posts

BIS WP 1382: higher US bank deposit rates slow stablecoin growth

A new BIS working paper by Ahmed and Aldasoro finds a 1 bp rise in US bank deposit rates cuts 10-week stablecoin growth from 15% to 12% — hitting USDC harder than USDT.

by 4 min read
policyresearchstablecoinusdcusdt

The Bank for International Settlements released Working Paper No. 1382, "Are Stablecoins and Bank Deposits Substitutes?", by Rashad Ahmed and Iñaki Aldasoro, on October 13, 2026. The paper quantifies a straight substitution: when US banks pay savers more, dollar-stablecoin market cap grows more slowly. The authors' preferred specification puts the slowdown at roughly a factor of three stronger than the headline OLS estimate, and the effect is sharper for USDC than for USDT. The full working-paper draft is public via the authors' prior release as Andersen Institute Working Paper 04-2026 (PDF); the BIS edition is indexed as WP 1382. CoinDesk's writeup and CryptoSlate's teardown carry the key numbers.

What the paper does

Ahmed and Aldasoro use weekly US data from January 2019 to June 2025 and regress stablecoin-market-cap growth on changes in average bank-deposit rates. The identification challenge is obvious — rates and stablecoin flows co-move with macro conditions — so the authors lean on a nonlinearity in bank pricing behavior: US banks barely pass through policy-rate moves below roughly a 3% federal funds rate, then pass them through aggressively above it. That kink lets them instrument the deposit-rate change with a function of the policy rate.

Headline results

  • OLS, 10-week horizon: A 1 basis point rise in average deposit rates cuts cumulative stablecoin growth by roughly 3 percentage points against a baseline of about 15%, i.e. 15% → ~12%.
  • IV preferred specification: The same 1 bp shock cuts growth by roughly 9 percentage points, i.e. 15% → ~6%. The IV estimate passes a bitcoin placebo test — the same shock has no measurable effect on BTC market cap, which the authors read as evidence the channel is deposit substitution, not generic risk-off flows.
  • Token-level asymmetry: The effect is larger for Circle's USDC than for Tether's USDT. The authors link this to USDC's closer ties to US retail and corporate depositors; USDT's base is more offshore and emerging-market, where US deposit rates matter less.
  • Dataset: Market-cap series grew from under $5B to over $220B across the sample window.

Numbers block

  • Paper: BIS WP 1382 / Andersen Institute WP 04-2026, full PDF here.
  • Authors: Rashad Ahmed, Iñaki Aldasoro (BIS).
  • Data: Weekly US, Jan 2019 – Jun 2025.
  • OLS effect: 1 bp → −3 pp of 10-week growth (base 15%).
  • IV effect: 1 bp → −9 pp of 10-week growth.
  • Pass-through threshold: ~3% federal funds rate.
  • Asymmetry: USDC > USDT elasticity to US deposit rates.

Why it matters

The paper is the clearest econometric evidence to date that dollar stablecoins and US bank deposits sit in the same money-demand function. That reads two ways. For banks, it is a quantified counter to the "stablecoins never touch our deposit base" line that trade groups have run for two years. For issuers, it is a flashing indicator that the next Fed cutting cycle should mechanically re-accelerate stablecoin growth, and that the next tightening will drag on it — most sharply at Circle. For regulators, it is a direct input to the ongoing policy question of whether to let banks pay interest on stablecoin reserves parked at the Fed (addressed separately in the ICBA v OCC case now in the DC District Court) and whether to count stablecoins in M2.

What to watch

  1. Fed trajectory. Stablecoin market cap and USD deposit rates now have a measured elasticity. The next SEP dot plot moves this market, not just rates markets.
  2. USDC vs USDT split. The paper predicts USDC share compresses faster than USDT's when US deposit rates rise. The next three months of DeFiLlama's stablecoin dashboard are the live test.
  3. Policy follow-through. Watch for the paper to show up in Fed, Treasury, and EBA stablecoin policy work — the authors are in the BIS Monetary and Economic Department, and the methodology is the kind central-bank staff cite.

Pattern

The BIS has published skeptical stablecoin work before — on cross-border risk (Bailey et al, 2025), on tokenized-deposit alternatives, on the mechanics of CBDCs. WP 1382 is the first to put a defensible elasticity on the substitution question. It will be cited for years in regulatory filings on both sides of the deposit-vs-stablecoin fence.

Related stories