USD Coin (USDC) is facing renewed pressure as rising bank deposit rates make traditional savings more attractive relative to holding non‑interest‑bearing stablecoins.
According to recent research from the Bank for International Settlements (BIS), even a one‑basis‑point increase in bank interest rates can reduce stablecoin market‑cap growth by roughly 3% over ten weeks, with USDC showing significantly higher sensitivity than its peers.
At the same time, Visa’s rapid expansion of USDC‑powered payment rails is accelerating real‑world utility, raising the question of whether growing payment adoption can offset the drag created by higher bank yields.
Bank Rate Pressure is Slowing Stablecoin Growth
A recent BIS study shows that stablecoin growth is directly affected by changes in traditional banking yields.
A one‑basis‑point increase in bank interest rates reduces stablecoin market‑cap growth by about 3% over ten weeks. Given that stablecoins typically grow around 15% annually, this rate pressure could reduce annual growth to roughly 12%.
USDC is particularly sensitive: it is found that USDC’s growth declines by 4.8 percentage points under rising bank‑rate conditions, compared with 1.9 percentage points for USDT.
The difference reflects USDC’s closer ties to U.S. institutions and its heavier use among regulated entities and corporate users.
Higher bank yields make traditional deposits more attractive relative to stablecoins, especially for users who hold stablecoins primarily for liquidity or short‑term settlement.
Importantly, BIS researchers found no significant link between bank rates and other cryptocurrencies, meaning the effect is specific to stablecoins rather than the overall digital‑asset market.
Despite these pressures, the BIS notes that rising rates slow stablecoin growth but do not reduce existing supply. Stablecoins remain widely used for trading, liquidity management, and cross‑border transfers, even if new inflows moderate during periods of higher bank yields.
Visa’s USDC Payment Rails Introduce New Demand Drivers
While rising bank rates challenge stablecoin demand, Visa’s expansion of USDC‑powered payment rails highlights a countervailing force: real‑world utility.
Visa Direct now supports USDC‑funded cross‑border payouts in more than 180 countries, with Inyo Global as its first partner.
The integration allows businesses to fund payouts in fiat while recipients receive them in USDC, enabling faster, borderless payments that bypass traditional banking hours and correspondent networks.
Visa’s stablecoin settlement volume has already reached an annualized run rate of $20 billion, representing more than a 15‑fold increase compared with last year.
The rapid growth suggests that stablecoins are shifting from speculative instruments to practical payment tools. Visa’s expansion aligns with broader industry trends: Mastercard, PayPal, Western Union, and MoneyGram have all integrated stablecoin rails into their global payment networks.
Visa’s multi‑chain strategy also strengthens USDC’s position. The company recently added five new blockchains, including Circle’s Arc, Base, Canton, Polygon, and Tempo, to its settlement pilot, bringing total support to nine networks. In Q1 2026, Visa reported a $7‑billion stablecoin‑settlement run rate, a 50% quarter‑over‑quarter increase.
These developments indicate growing confidence in on‑chain settlement rails and highlight stablecoins as a “viable complement” to traditional payment infrastructure.
USDC’s Position in a Rapidly Evolving Stablecoin Market
USDC’s total circulating supply stands at $72.6 billion. Despite recent growth pressures, USDC remains one of the most widely used stablecoins for institutional payments, regulated financial applications, and cross‑border commerce.
Real‑world integrations continue to expand; for example, the XDC Network recently partnered with OrbitX Pay to enable direct USDC spending at Visa‑accepting merchants, allowing users to keep funds on‑chain until the moment of payment.
Payment integrations like this reduce reliance on fiat conversions and off‑ramps, which often introduce delays and additional fees.
Stablecoin adoption is also rising among freelancers, sellers, and global marketplaces.
A BVNK research report found that 56% of stablecoin users plan to acquire more over the next 12 months, and more than half increased their holdings over the past year. Among freelancers receiving stablecoin payments, about 35% of their income now comes through stablecoins.
Behavioral trends suggest that stablecoins, especially USDC, are becoming embedded in everyday financial activity, not just crypto‑native environments.
