• The BIS paper finds that higher average US bank deposit rates are followed by slower stablecoin market-cap growth, which makes deposit pricing a competitive lever.
• Growth slows but does not reverse, so rate competition moderates stablecoin adoption without stopping it.
• The effect is reported as stronger for USDC than for USDT, which the authors link to USDC's closer ties to US users.
• The paper does not establish actual losses of bank deposits or lending, and it covers a single high-rate period.
• Secondary coverage reports different effect sizes for the instrumented estimate, so any figure should be checked against the paper itself.

Banks have a lever against stablecoin adoption, and it is the oldest one they own: the deposit rate. A Bank for International Settlements working paper reported by CoinDesk finds that higher US deposit rates were followed by slower stablecoin market-cap growth between January 2019 and June 2025. The effect is a moderation, not a reversal, and the authors stop short of claiming stablecoins have taken deposits or lending from banks.

What the paper measures

The paper, BIS Working Paper No. 1382 by Rashad Ahmed and Iñaki Aldasoro, uses weekly data and controls for bitcoin prices, Treasury yields and broader financial conditions. As CoinDesk reports it, a rise in average US bank deposit rates predicted slower stablecoin growth, with average ten-week growth falling from about 15% to about 12% in the baseline estimate. The authors' preferred estimate, which accounts for banks raising rates in response to stablecoin growth, shows a larger effect but carries acknowledged weaknesses.

Why the effect is partial

In both specifications reported by CoinDesk, growth slowed but did not reverse. That matters for how compliance and treasury teams read the result: deposit pricing is a brake on adoption, not a barrier to it. Stablecoin demand evidently has drivers that a higher savings rate does not remove, such as settlement use and cross-border transfers. The authors say banks retain some influence over the pace of adoption through deposit pricing, which is a narrower claim than substitution.

USDC reacts more than USDT

CoinDesk reports that the slowdown was stronger for USDC than for USDT, and that the authors tie this to USDC's closer links to US users. The implication is structural rather than behavioral: coins whose holders are anchored in the US banking system sit closer to the deposit alternative, while coins used mainly outside it respond less to US rates. The paper's sample covers US data only, so it cannot say how Gulf dirham or riyal deposit rates would interact.

What the paper does not show

The authors say the analysis concerns the allocation of funds between assets and does not establish that stablecoin growth reduces aggregate bank deposits or lending. The sample also contains a single high-rate period, and secondary coverage reports differing effect sizes for the instrumented estimate. Readers should treat precise magnitudes with caution and read the paper directly before relying on any one number.

What it means for banks and challengers

The second-order effect is a cost trade-off. Paying savers more may slow stablecoin uptake but raises funding costs across the whole deposit book, which weighs hardest on challengers that compete on yield. For Gulf banks and neobanks, where regulators are still defining stablecoin rules, the practical step is to model deposit-rate sensitivity separately for retail and payments balances, and to watch whether regulators treat deposit pricing as a stability tool.