Your Savings Account Is Beating USDC, and the BIS Just Quantified It
A Bank for International Settlements study out Oct. 13 shows USDC growth is roughly 2.5x more sensitive to bank deposit repricing than USDT, and that's a structural problem for Circle, not a marketing one.
The Bank for International Settlements dropped a study on Oct. 13 that should have every Circle bull sweating. Here's the short version. When banks pay more on deposits, USDC growth falls roughly 2.5 times harder than USDT growth.
Anon, let me explain.
The Study
Let me walk you through it. The BIS research team modeled what happens to stablecoin supply when deposit rates move. Deposit rates are what your bank pays you to park cash there. They're the competition nobody in crypto wants to talk about.
Higher deposit rates mean holding a bank balance pays. Zero-risk yield. FDIC insurance. No smart contract exposure. So money leaves stablecoins and lands back in the bank.
The numbers are ugly. A one-basis-point increase in deposit rates was tied to about 4.8% less cumulative USDC growth over ten weeks. USDT? Only 1.9% less. Same shock. Very different outcomes.
The chain doesn't lie. USDC is the stablecoin that lives where US banks live. That's the whole problem.
The Real Competition
Look, everyone frames this as USDC versus USDT. Wrong fight. USDC's actual competitor is a money market fund and a high-yield savings account.
Think about the structure. USDT dominates offshore, on Tron rails, in markets where a dollar is worth more than the local currency. Those holders aren't comparing Tether to a Chase savings account. They're comparing it to a collapsing peso. Deposit repricing barely touches them.
USDC holders are a different crowd. US-facing. Compliant. Onshore. Institutionally adjacent. Circle's users have bank accounts. So why would anyone park a dollar in USDC when a T-bill pays more for zero effort?
Exactly. The report confirms what the data already told us. USDC's growth problem is a rate problem, not a product problem.
But here's the wrinkle. Exchange rewards complicate everything. Binance, Coinbase, and others run promos that pay you to hold stablecoins on their platforms. Those payouts can beat a bank deposit, which muddies the model. The BIS acknowledges this. Adoption forecasts built on deposit rates alone will overshoot and undershoot depending on who's running a campaign that month.
And that's the frustrating part. There's a clean signal buried under a pile of temporary incentives.
What to Watch
The Fed is the whole ballgame. Every FOMC meeting is now a USDC supply event. Cut rates, deposit yields fall, USDC gets its tailwind back. Keep rates higher for longer, and Circle keeps bleeding growth to FDIC-insured accounts.
Watch the spread between the top high-yield savings rates and what Coinbase pays on USDC balances. That gap is the real adoption curve, not whatever TVL chart you're staring at.
Second thing. Watch Circle's own earnings. If they start subsidizing yields harder to defend share, that tells you the pressure is real. Real talk: no issuer eats margin for fun.
And watch the rate-cut timeline. If the Fed starts easing over the next couple of quarters, expect USDC supply to inflect upward. If it holds, expect more flat-to-down prints.
This is bigger than people realize. Stablecoin adoption was never just about crypto utility. It's about whether holding dollars in crypto beats holding dollars in a bank.
Right now? The bank's winning.
