Federal Reserve Bank Governor Christopher Waller expressed his support for the regulated use of stablecoins, stating that clear rules could enhance the US dollar's role as a global reserve currency. Waller, who oversees the payments subcommittee of the Fed's Board of Governors, made his stance known in an interview with the Atlantic Council on February 6, highlighting the potential for stablecoins to expand the dollar's international reach.
Waller believes that stablecoins offer a new avenue for payment systems and, with proper regulation, could strengthen the use of the dollar in global trade, finance, and investment activity. His comments come at a time when the dominance of the US dollar is being highlighted, with the BRICS coalition advocating for a shift away from the dollar in international trade.
According to an October report by Andreessen Horowitz, the US dollar accounted for more than 99% of total stablecoin currency, with Tether (USDT) as the most traded stablecoin, accounting for nearly 80% of volume. Waller sees stablecoins as a beneficial addition to the payments ecosystem, provided they are subject to regulatory oversight to ensure full support and proper authorization.
The discussion on stablecoins is particularly relevant as the US faces competition for its currency's international standing. Waller points out that stablecoins make it more difficult for other countries to reduce the dollar's reserve status due to the difficulty of controlling digital assets compared to physical currency.
In the context of stablecoin adoption, a Chainalysis report in October indicated that the US is lagging behind, with the market share of stablecoin transactions on US-regulated exchanges falling below 40% by 2024. In contrast, transactions on overseas exchanges have increased to 60%.
Legislative efforts are underway to create a regulatory framework for stablecoins, as evidenced by the introduction of the GENIUS stablecoin bill by US Senator Bill Hagerty on February 4. The proposed legislation outlines the structure under which stablecoins are recognized as digital assets linked to the US dollar, with Federal Reserve oversight for issuers with market capitalizations exceeding $10 billion, while state-level regulations would apply to smaller issuers.
This legislative move coincides with President Donald Trump's crypto advisor, David Sacks, confirming plans to prioritize stablecoin innovation in the US. The stablecoin market has experienced significant growth, surpassing a market capitalization of $200 billion in January and will be widely adopted by 2024, with transaction volumes reaching $27.6 trillion, surpassing the combined volumes of Visa and Mastercard.
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