Federal Reserve Governor Says Stablecoins Extend US Dollar Reach, Calls for Regulatory Framework
Federal Reserve Governor Christopher Waller has emphasized the potential of stablecoins to expand the reach of the US dollar, while calling for a clear regulatory framework that would allow both banks and non-banks to issue dollar-pegged digital currencies.
Speaking at a conference in San Francisco on February 12, Waller described stablecoins as an “important innovation” that could significantly enhance retail and cross-border payments.
Waller acknowledged that the stablecoin market has matured, but stressed that proper regulation is necessary to address associated risks.
Waller Advocates for Banks and Private Firms to Issue Stablecoins
He argued that both banks and private companies should have the ability to issue regulated stablecoins, ensuring a competitive and efficient payments landscape.
He explained that this framework should allow both non-banks and banks to participate in the issuance of stablecoins while considering how such regulation affects the broader payments system.
He also expressed confidence in the private sector’s ability to develop stablecoin solutions, emphasizing that the government’s role is to establish clear and fair rules rather than interfere with market-driven innovation.
According to Waller, businesses should be allowed to create innovative financial products, while regulators focus on ensuring a safe and transparent operating environment.
Federal Reserve Governor Christopher Waller says stablecoins have the potential to extend the international role of the dollar during his remarks at a conference in San Francisco https://t.co/cojR9Lytoy pic.twitter.com/L66CX6hTte
— Bloomberg TV (@BloombergTV) February 12, 2025
Despite their potential, stablecoins still face significant challenges that must be addressed before they can reach mainstream adoption.
Waller pointed out that the lack of a clear regulatory framework in the United States remains a major hurdle.
Additionally, there is regulatory fragmentation between state and international laws, making compliance difficult for issuers and financial institutions.
He also highlighted the risks associated with stablecoin “depegs” and failures, which could pose financial stability concerns.
Stablecoins Play an Important Role in Financial Ecosystem
Nevertheless, Waller recognized that stablecoins already play an important role in the financial ecosystem.
They provide a stable store of value for crypto traders, facilitate access to US dollars in high-inflation economies, enable faster cross-border payments, and have shown early but promising use cases in retail transactions.
Earlier this month, while speaking at the Atlantic Council, Waller referred to stablecoins as “synthetic dollars”, comparing them to commercial bank money and highlighting their ability to open up new payment possibilities.
He noted that if stablecoins can foster competition, broaden financial inclusion, reduce transaction costs, and make payments faster and more efficient, then they should be embraced.
Concluding his remarks, Waller expressed hope that the stablecoin market will grow or decline based on its real-world utility and benefits to consumers.
He reiterated that while the private sector must continue innovating to meet market needs, the public sector has the responsibility to create a well-defined and globally coordinated regulatory framework.
More recently, Federal Reserve Chair Jerome Powell affirmed the central bank’s support for developing a regulatory framework around stablecoins during a Senate hearing on February 11.
Powell stated that the Federal Reserve supports the creation of a regulatory framework for stablecoins, noting the importance of protecting consumers and savers.
He acknowledged that the future of stablecoins remains uncertain but noted their potential use by both consumers and businesses.
Source: cryptonews.com
