Fed Governor Waller Backs Regulated Stablecoins

Federal Reserve Governor Waller has recently expressed his support for the issuance of regulated stablecoins by both banks and non-banks. In a speech at a conference in San Francisco, Waller highlighted the potential of stablecoins to maintain and expand the role of the US dollar internationally, provided they have robust business use cases and a harmonized regulatory framework.

Waller emphasized the need for a US regulatory and supervisory framework tailored to the risks of stablecoins. This framework should address the risks directly, comprehensively, and with precision. He suggested that it should permit both banks and non-banks to issue regulated stablecoins and consider the regulatory implications for the payments space.

Waller also acknowledged the potential challenges faced by stablecoins, including a "run risk" and regulatory fragmentation. He noted that the emergence of different stablecoin regulatory regimes across countries and regions could result in domestic and cross-border regulatory conflicts, making it difficult for issuers of US dollar stablecoins to operate globally.

Waller recognized the key role played by state regulators in the development of the stablecoin market. He pointed out that several states are in the process of formulating or finalizing new regulations, and there is a risk of inter-state regulatory conflicts that could hinder the uniform usability of the same stablecoin across all states, thereby reducing the scalability of stablecoins.