# Circle Seeks Balance for USDC as Study Highlights Higher Bank Rate Pressure

- URL: https://stocks.freetheai.org/news/circle-seeks-balance-for-usdc-as-study-highlights-higher-bank-rate-pressure-979b27
- Published: 2026-10-18T11:40:51Z
- Category: crypto; sentiment: mixed; impact: medium
- Symbols: [CRYPTO:USDCUSD](https://stocks.freetheai.org/symbols/CRYPTO-USDCUSD), [CRYPTO:USDTUSD](https://stocks.freetheai.org/symbols/CRYPTO-USDTUSD)
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Circle (CRCL) Chief Executive Officer Jeremy Allaire stated that the company is seeking a middle ground for its USDC stablecoin between decentralized networks and traditional banking standards. Speaking following the September launch of Circle's Arc mainnet, Allaire noted that while USDC operates on decentralized principles, it uses known, non-anonymous infrastructure operators bound by legal commitments to serve mainstream financial institutions.

The comments come alongside findings from a Bank for International Settlements study covering U.S. data from January 2019 to June 2025. The research revealed that higher bank deposit rates slow stablecoin adoption, impacting USDC significantly more than Tether (USDT). A 1-basis-point increase in deposit rates was linked to a 4.8 percentage point reduction in cumulative USDC growth over 10 weeks, compared to just 1.9 percentage points for USDT. The difference stems from USDC's higher reliance on U.S. institutional and decentralized finance users, whereas USDT is primarily used in overseas and emerging markets.

With the Federal Reserve raising its target range to 3.75% to 4.00% last month, bank deposit rates remain above the 3% threshold where banks pass on higher yield to customers. Investors are now tracking legislative progress on the stalled CLARITY Act in the U.S. Senate, which addresses whether stablecoin issuers will be permitted to pay yields to token holders.

## Key points

- Circle CEO Jeremy Allaire aims to balance USDC between open crypto networks and banking standards using identifiable Arc network validators.
- A research study found higher bank deposit rates reduce USDC growth more than Tether due to USDC's closer ties to U.S. institutions.
- A 1-basis-point rate hike relates to a 4.8 percentage point drag on 10-week USDC growth compared to 1.9 percentage points for USDT.
- The stalled CLARITY Act in the Senate centers on whether stablecoin issuers should be allowed to pay yields to token holders.

## Questions and answers

### Why do higher interest rates affect USDC more than Tether?

USDC has closer connections to U.S. depositors, domestic institutions, and decentralized finance users. When U.S. bank deposit rates rise, investors keep more capital in traditional bank accounts. Tether is primarily used offshore and in developing markets where U.S. rates have less impact.

### What is the CLARITY Act and how does it affect stablecoins?

The CLARITY Act is a U.S. crypto market structure bill stalled in the Senate. A key issue in the bill is determining whether stablecoin issuers are permitted to pay interest or yields to token holders, which could help stablecoins compete with traditional bank deposit rates.

### How does Circle balance decentralization on its Arc blockchain?

Circle uses known, non-anonymous infrastructure operators for its Arc network. Operators are selected based on legal and operational commitments to satisfy traditional financial institutions, while still allowing software deployment and cross-blockchain USDC transfers.