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Higher bank rates slow stablecoin growth, USDC hit hardest, BIS paper shows
A Bank for International Settlements working paper analyzing 339 weeks of US data from January 2019 to June 2025 finds that rising bank deposit rates dampen stablecoin expansion. The study notes the reserve‑backed stablecoin market grew from under $5 billion to over $220 billion in that period, but a 5‑basis‑point jump in deposit rates can halt growth. Ten weeks after a 1 bp rise, USDC growth fell 4.8 percentage points while USDT fell 1.9 points. USDC balances in DeFi lending pools dropped 5.5%, compared with a statistically insignificant 0.8% decline for USDT.