Fed governor notes potential benefits of a clear regulatory regime for stablecoins

Reflecting on what he called the “maturing” stablecoin market, a Federal Reserve Board governor reminded of the continued lack of a “clear and targeted” legal and regulatory framework that could keep U.S. issuers of stablecoins from being able to operate at a global scale.

Fed Board Gov. Christopher Waller, in prepared remarks for a conference held Wednesday in San Francisco, discussed use cases and growth of stablecoins, which have been tied to the U.S. dollar and, he added, are involved in more than 80% of trading volume on major centralized crypto exchanges. He highlighted some roadblocks to their full realization, including ongoing concerns around safety and soundness; fragmentation around the use and acceptance of stablecoins; and differing regulatory regimes, domestically and internationally.

On that third item, Waller noted that as with the U.S. dual banking system, “a complementary framework with state and federal regulators working together can allow innovation to flourish while achieving some of the benefits of scale that come with a harmonized set of market rules.” In further remarks, he said creating consistency at the federal level “could allow federal authorities to negotiate with foreign counterparts to ensure global regulations serve the interests of U.S. consumers and businesses and allow the U.S. to be a regulation setter for an asset class primarily denominated in our national unit of account.”

Waller said he hopes the stablecoin market will grow or diminish on the merits of their benefits to consumers and the broader economy. “For the private sector, that means continuing to develop innovative solutions that fit a market need while building sustainable business models,” he said. “And for the public sector, it means setting clear and targeted legal and regulatory frameworks and coordinating those frameworks across states and national boundaries to enable private sector innovation at a global scale.”

Reflections on a Maturing Stablecoin Market – Remarks by Fed Gov. Christopher J. Waller at A Very Stable Conference, San Francisco, Calif.