Are stablecoins and bank deposits substitutes?

Iñaki Aldasoro and Rashad Ahmed

No 1382, BIS Working Papers from Bank for International Settlements

Abstract: We test whether stablecoins and bank deposits act as substitutes by estimating the semi-elasticity of stablecoin market capitalization with respect to deposit rate changes. Using local projections fit to weekly U.S. data from January 2019 to June 2025, we find that deposit rate increases predict slower stablecoin growth. To address endogeneity, we exploit a nonlinearity in deposit rate pass-through. Whereas other money market rates track the federal funds rate roughly linearly, banks reprice deposits more aggressively once it exceeds approximately 3%. Against average ten-week stablecoin growth of 15%, ordinary least squares estimates imply a reduction of roughly 3 percentage points per basis point of deposit repricing, or about 2.4 percentage points per one-standard-deviation move. Instrumental variable estimates are roughly three times larger and pass a placebo test using non-stablecoin cryptocurrencies. Effects are stronger for USDC than for USDT, consistent with the former’s closer ties to U.S. depositors. Cross-sectional variation in repricing across deposit tiers provides independent evidence of substitution. The size of the stablecoin sector therefore depends in part on how banks price deposits.

Keywords: stablecoins; bank deposits; deposit rates; substitution; monetary policy (search for similar items in EconPapers)
JEL-codes: E42 E43 G21 G23 (search for similar items in EconPapers)
Date: 2026-10
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