Fed Research Adds Stablecoins to Dollar Policy Agenda

At the Federal Reserve’s June 22-23 conference in New York, Governor Christopher Waller placed dollar-backed stablecoins on Kevin Warsh’s dollar-policy research agenda. In remarks to attendees, he described “distributed-ledger technologies and tokenized assets, including stablecoins, as creating channels for global dollar intermediation.” The Fed characterized the work as research rather than new policy.

Stablecoins are digital tokens denominated in U.S. dollars that users can hold, move across blockchains, trade, or redeem with an issuer. Holding a dollar token differs from holding a U.S. bank deposit or an investment in a money market fund because access, transfer methods and redemption paths can be cross-border and operate on private rails.

Federal researchers said they will examine where the dollars behind stablecoins originate, where reserves are held, how redemptions work, and whether token-driven flows affect banks and short-term funding markets.

Market data near June 25 showed Tether’s USDT with a market capitalization close to $186 billion and Circle’s USDC near $73.8 billion. Tether’s 24-hour trading volume was about $81 billion. Circle reported USDC in circulation at $74.3 billion on June 22 and noted that most reserves are held in the Circle Reserve Fund, an SEC-registered government money market fund managed by BlackRock.

Fed research and related papers outline possible channels for transmission. A May FEDS Note highlighted that stablecoins combine balance-holding and payment functionality on digital networks. A December Fed paper described the deposit impact as conditional, depending on who demands tokens, what assets users convert, and how issuers hold reserves. A 2026 New York Fed staff report warned that stablecoin activity can transmit liquidity stress to banks and complicate implementation of monetary policy. A Bank for International Settlements working paper found that inflows into dollar-backed stablecoins can lower short-term Treasury-bill yields, with larger effects during Treasury market stress.

A 2026 Treasury Borrowing Advisory Committee presentation reported that major stablecoin issuers currently hold less than 1% of outstanding Treasury securities, and noted that growth driven by new offshore dollar demand could increase demand for short-term Treasury issuance. The presentation also noted that rapid redemptions could push reserve managers to sell short-term assets, affecting repo and other funding dynamics.

Banks and payment-system operators have announced responses. On June 5, the Clearing House disclosed that major banks will back an on-chain commercial-bank-money initiative to support tokenized deposit clearing and settlement and to connect blockchain activity with existing systems such as RTP and CHIPS.

Conference materials and staff reports identify reserve management, redemption mechanics, issuer concentration and the source of demand as areas for further study. The Fed framed stablecoins at the June conference as a topic for research within the dollar agenda and placed them alongside other channels for dollar distribution and short-term funding.