"Federal Reserve Confronts the Future: DeFi, AI, and the Race to Modernize Payments"

The U.S. Federal Reserve will host a payments innovation conference on October 21, with a focus on the convergence of traditional and decentralized finance. The event, led by Governor Christopher J. Waller, aims to explore how technological advancements can enhance the safety and efficiency of payment systems while addressing challenges and opportunities in the evolving financial landscape. This marks one of the first formal acknowledgments by the Fed of decentralized finance (DeFi) in its policy discussions [1].

The agenda will include discussions on stablecoins, artificial intelligence (AI) in payments, and the tokenization of financial products. These topics reflect the Fed’s broader interest in modernizing U.S. payment infrastructure. In July 2023, the Federal Reserve launched FedNow, a real-time payments system enabling 24/7 instant bank transfers. The upcoming conference aligns with this trajectory by incorporating DeFi and tokenization into the conversation, signaling a shift in the central bank's engagement with emerging financial technologies [2].

Stablecoins are expected to be a focal point of the conference, given the ongoing regulatory debates around their role in the financial system. U.S. policymakers have increasingly discussed the need for stablecoin issuers to adhere to bank-like safeguards to mitigate systemic risks. The recent passage of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act requires stablecoin issuers to fully back their tokens with cash or short-term Treasury bonds and comply with anti-money laundering rules. However, the law does not prohibit crypto exchanges from offering rewards on stablecoin holdings, a provision that has raised concerns among banking industry groups about potential regulatory loopholes [3].

The intersection of artificial intelligence and payments will also be examined at the event. AI has already made significant inroads in fraud detection and transaction monitoring, with major firms such as Visa and Mastercard leveraging the technology to enhance payment security. The Fed’s decision to spotlight AI underscores its view that the technology is now central to the evolution of payments infrastructure. This move is consistent with broader trends in the payments sector, where innovation in AI and machine learning is reshaping how financial institutions manage risk and improve customer experiences [4].

Tokenization of financial products will be another key discussion point. Pilot projects, such as JPMorgan’s JPM Onyx platform and Broadridge’s blockchain-based repo platform, have demonstrated the potential of tokenized assets in real-world financial markets. These initiatives have moved billions of dollars in transactions, illustrating the scalability and efficiency of token-based systems. By including tokenization on the agenda, the Federal Reserve is aligning its discussions with developments in both private and public markets, acknowledging the growing influence of blockchain technology in financial services [5].

The conference will be livestreamed on the Federal Reserve’s website, with details on participants and panels expected to be announced in the coming weeks. The event reflects the central bank’s ongoing commitment to understanding and adapting to technological change in finance. As the payments landscape continues to evolve, the Federal Reserve’s engagement with innovation—spanning traditional and decentralized finance—highlights its role in shaping the future of financial infrastructure in the U.S. [6].

Source:

[1] title1 (https://www.benzinga.com/crypto/cryptocurrency/25/09/47479367/federal-reserve-to-host-october-conference-on-convergence-of-traditional-and-decentralized-finance)

[2] title2 (https://cryptorank.io/news/feed/3e9df-fed-to-host-a-conference-on-tradfi-defi-ai)

[3] title3 (https://www.wired.com/story/genius-act-loophole-stablecoins-banks/)

[4] title4 (https://www.theblock.co/post/369338/federal-reserve-conference-stablecoins-tokenization)

[5] title5 (https://watcher.guru/news/federal-reserve-announces-conference-to-discuss-crypto)

[6] title6 (https://www.morganlewis.com/pubs/2025/09/the-genius-acts-stablecoin-regulatory-scheme-promotes-uniformity-but-may-fall-short)