New research has indicated that the US Federal Reserve’s monetary policy has only a limited effect on stablecoin lending rates, according to a conference at Warwick Business School.
Presenting at Warwick Business School’s Gillmore Centre for Financial Technology Academic Conference on DeFi and Digital Currencies, Andrea Barbon of the University of St. Gallen analysed 2.5 million transactions of US dollar-backed stablecoins on the DeFi platform Aave.
The conference, held at WBS London in The Shard, was attended by representatives from the European Central Bank, the Bank for International Settlements (BIS), Banque de France, and leading fintech academics worldwide.
Researchers highlighted the growing popularity of stablecoins and Donald Trump’s new Genius Act, which regulates cryptocurrency, arguing that central banks should monitor their influence more closely.
Stablecoins currently have a market capitalisation of around US$250 billion, but Professor Barbon said the Fed’s impact on their interest rates remains limited.
“Interest rates for stablecoins are very volatile,”
Professor Barbon explained.
“Despite being pegged to the US dollar, stablecoins operate in a way that largely resists the traditional controls of the Federal Reserve. US monetary policy does influence stablecoin rates, but its effect is minimal, explaining only a limited portion of their variation. The majority of the volatility is driven by factors specific to the crypto ecosystem, particularly demand-driven shocks related to the desire for leverage to invest in other crypto assets like Bitcoin.”
The research also found that stablecoins respond to changes in the Fed’s interest rates only after a delay of several days, sometimes up to a week.
“This is an immature market with rates primarily driven by the volatile demand for leverage within the crypto ecosystem, which is not directly tied to traditional monetary policy,”
Professor Barbon said.
“As stablecoins grow and with the new Genius Act, central banks will need to have more oversight of the stablecoin market and its influence.”
Other research presented at the conference included studies on cryptocurrency price bubbles by Maarten van Oordt of Vrije Universiteit Amsterdam, cross-border flows of Bitcoin, Ethereum, and stablecoins by the BIS, blockchain technology developments from the University of Bonn, Carnegie Mellon University, and George Mason University, as well as work on credit cycles in tokenised real estate markets by Daniel Ruf of the University of Cambridge, and liquid staking on Ethereum by Christine Parlour of Haas School of Business, UC Berkeley.
Ram Gopal, Director of the Gillmore Centre for Financial Technology, said:
“This conference has highlighted the complex and evolving dynamics where traditional finance meets the decentralised world of fintech. The research presented here, particularly on the limited influence of central banks on stablecoin rates, demonstrates how our work at the Gillmore Centre contributes to the wider discussion on financial stability, policy, and innovation.”
Featured image credit: Edited by Fintech News Switzerland, based on image by freepik
The post US Fed Has Limited Impact on Stablecoin Lending Rates appeared first on Fintech Schweiz Digital Finance News - FintechNewsCH.
Full story here Are you the author?
You Might Also Like
BlackRock’s Bitcoin ETF Becomes Top Revenue Driver, Surpasses S&P 500 Fund
2025-07-16
BlackRock’s bitcoin exchange-traded fund (ETF) is becoming a major revenue generator for the asset manager.
According to Bloomberg, the roughly US$75 billion iShares Bitcoin Trust ETF (IBIT) earns an estimated US$187.2 million in annual fees at a 0.25% expense ratio, surpassing the US$187.1 million from the firm’s core iShares S&P 500 ETF (IVV). IBIT is now the third highest revenue-generating ETF for BlackRock across nearly 1,200 funds, says Eric Balchunas, a senior ETF analyst for Bloomberg.
BlackRock is the world’s largest asset manager with US$11.5 trillion in assets under management (AUM) as of 2024. Its long-established IVV fund, launched in 2000 and based on the S&P 500 index, is one of its cornerstone offering, managing around US$624 billion in assets and charging an ultra-low
Crypto Adoption on the Rise, Driven by Europe, Younger Demographics
2025-06-13
Cryptocurrency adoption has increased remarkably over the past year, driven by European customers, and younger generations. according to a new survey commissioned by Gemini. Positive developments, including the launch of US cryptocurrency exchange-traded funds (ETFs) and pro-crypto policies from the Trump administration, have also contributed to rising confidence and interest in digital assets, the study found.
Conducted in H1 2025, the research polled more than 7,200 consumers in the US, the UK, France, Italy, Singapore, and Australia. It sought to assess the level of awareness of cryptocurrencies, motivations for owning and trading cryptocurrencies, general attitudes towards cryptocurrencies, and opinions on recent industry developments.
Europe leads in crypto ownership growth
The survey
Tags: Blockchain,Featured,newsletter,USA
