Fed Governor Calls for Regulated Stablecoin Framework

In a significant development, a member of the U.S. Federal Reserve's Board of Governors, Christopher J. Waller, has called for a regulatory framework that would enable banks and institutions to issue dollar-pegged stablecoins. Waller, in a speech delivered at a conference in San Francisco, argued for a clear regulatory regime that would allow both non-banks and banks to issue regulated stablecoins, while considering the impact of regulation on the payments landscape.

Waller highlighted the potential benefits of stablecoins, including broader access to U.S. dollars, streamlined cross-border payments, and enhanced retail payments. He acknowledged the need for a regulatory framework that addresses the safety and soundness of stablecoins, as well as the risks associated with them, such as the possibility of de-pegging from the underlying fiat currency.

In response to Waller's call, Republican Senator Bill Hagerty of Tennessee proposed the GENIUS Act, a bill aimed at regulating and defining stablecoins, as well as establishing licensing and reserve requirements for issuers. This legislative proposal aligns with Waller's advocacy for a comprehensive regulatory framework that balances the potential benefits and risks of stablecoins.

The Fed governor's remarks come amidst growing interest in stablecoins and their potential role in the global financial system. As the demand for digital assets continues to rise, regulators are increasingly focusing on the need for clear guidelines and oversight to ensure the stability and security of these instruments. Waller's call for a regulatory framework that allows banks and institutions to issue stablecoins reflects this evolving landscape and the importance of striking a balance between innovation and risk management.