BIS Research Finds Stablecoins Compete With Bank Deposits,…
By Karthik Subramanian
AI summary of the source article
A Bank for International Settlements working paper found that stablecoins compete directly with traditional bank deposits. Researchers determined that higher bank deposit rates were followed by slower stablecoin market capitalization growth, with a stronger substitution effect for USDC than USDT.
Why it matters
The findings have implications for banks because deposits represent an important source of funding for lending and other financial activities. If customers increasingly transfer funds into stablecoins, banks may face pressure to offer more competitive deposit rates, potentially increasing funding costs.
Key facts
- BIS research analyzing US data from January 2019 to June 2025 found higher bank deposit rates led to slower stablecoin growth.
- The substitution effect was stronger for Circle's USDC than Tether's USDT, while non-stablecoin cryptocurrencies showed no comparable effect.
- Global stablecoin capitalization was estimated by the BIS at approximately $320 billion at the end of May 2026.
Source excerpt · FinanceFeeds
Stablecoins compete directly with traditional bank deposits for customer funds, according to new research published by the Bank for International Settlements (BIS), adding empirical evidence to concerns about the growing role of digital dollars in the financial system. The October 13, 2026 working paper, titled Are Stablecoins and Bank Deposits Substitutes? , examines how changes in US bank deposi…