Higher deposit rates slowed USDC growth more than USDT

A Bank for International Settlements study released Oct. 13 found that higher U.S. deposit rates were associated with a larger slowdown in USDC growth than in USDT growth.

A one-basis-point increase in deposit rates was linked to about 4.8% less cumulative USDC market-cap growth over the next 10 weeks, compared with 1.9% less growth for USDT. The estimate for all stablecoins was about 2.8% less cumulative growth per basis point of deposit-rate repricing.

Researchers Rashad Ahmed and Iñaki Aldasoro analyzed weekly data from January 2019 through June 2025. The BIS released the October edition after an earlier version was published on March 24. The earlier abstract also reported a stronger response from USDC.

The study’s deposit-rate measure averaged six national savings and money-market deposit-account series. It was separate from the Federal Reserve’s policy rate and did not represent the rate offered by any particular bank or account.

The authors linked USDC’s larger response to its closer connections with U.S. institutional and decentralized-finance users. They associated USDT’s smaller response with its use in offshore markets and developing economies. The data did not identify which holders changed their positions or which bank accounts were involved, so the issuer explanation remains an interpretation of the results.

The baseline analysis used ordinary least squares. Its estimates measured changes in cumulative log market-cap growth over 10 weeks after a one-basis-point change in deposit rates.

A second model used an instrumental-variable method intended to isolate the effect of deposit repricing. It estimated about 9.1% less stablecoin growth per basis point. The method relied on banks passing through policy-rate changes more strongly when the federal-funds target midpoint four weeks earlier was at least 3.125%.

The authors listed limitations to that approach. The sample included only one high-rate period, and the first-stage F-statistic was 9.78, below the conventional threshold of 10 cited in the study. In the instrumental-variable results, USDC’s 95% confidence band remained below zero over 10 weeks, while USDT’s included zero.

The researchers controlled for policy and Treasury rates, Bitcoin prices, the dollar index and market volatility. Additional tests covering the Silicon Valley Bank episode, crypto-market events, trading volume and decentralized-finance yields generally retained negative relationships. Results for stablecoins supplied to lending protocols were imprecise.

The study also examined returns available through exchanges. A BIS bulletin published June 19 described reserve-based payments, in which an exchange passes some income from an issuer’s reserve assets to holders, and activity-based payments tied to lending, trading or other activity. The bulletin used Coinbase and Binance as examples of the two models.

Coinbase’s USDC Rewards terms describe the program as funded by the exchange without using or lending a customer’s USDC without instruction. Eligibility, rates and membership requirements vary by region and account type. Coinbase says USDC balances held in its accounts are not deposit accounts and do not have FDIC or SIPC insurance.

The study’s estimates measure how stablecoin balances responded to bank deposit-rate changes. They do not show how much bank lending changed. That would require data on where stablecoin reserves were held, how banks replaced funding and how lending changed. The estimates also cannot be applied directly to a Federal Reserve rate increase without accounting for bank repricing and returns available through exchanges and other platforms.