The battle for your bags
Real talk: the tension between traditional banks and the crypto ecosystem is highkey intensifying. A new working paper from the Bank for International Settlements (BIS) is diving into the data to see if banks can actually stop people from parking their money in stablecoins like USDT and USDC.
Researchers Rashad Ahmed and Iñaki Aldasoro looked at weekly data from 2019 to mid-2025. Their big takeaway? Banks might have more power than we thought. They found that even a tiny increase in bank deposit rates—just one basis point, or 0.01%—can lead to slower growth for stablecoins. In their analysis, this small hike dropped the ten-week growth rate of stablecoin market cap from 15% to 12%. When they accounted for banks actively raising rates to compete, the growth slowdown was even more significant, dropping to about 6%.
Why it matters
It’s giving a major power play. The study found this relationship was stronger for Circle’s USDC, which makes sense since it's more tethered to U.S. users. Bank of America CEO Brian Moynihan has previously sounded the alarm, worried that trillions of dollars could move into stablecoins and yield-bearing products, which would mess with bank lending capacity.
However, keep in mind this isn't financial advice and the situation is evolving. As more yield-bearing stablecoins and tokenized money market funds hit the space, the dynamics might shift. For now, it’s clear that banks are looking at ways to hold onto their liquidity by playing the interest rate game. The plot thickens as the TradFi vs. DeFi battle continues.
