Rising demand for US dollar-backed stablecoins could contribute to lower interest rates, according to Federal Reserve Governor Stephen Miran.
Speaking at the BCVC summit in New York on Friday, Miran — appointed by former President Donald Trump — said that dollar-pegged crypto tokens may be exerting “downward pressure” on the neutral rate, or r-star, the level of interest that neither stimulates nor restrains economic activity.
If the neutral rate declines, the Fed would likely respond by cutting its policy rate, he added.
The combined market capitalization of all stablecoins currently stands at around $310.7 million, according to CoinGecko. Fed research cited by Miran projects that figure could swell to as much as $3 trillion over the next five years.
“My view is that stablecoins are already boosting demand for U.S. Treasury bills and other dollar-denominated liquid assets from buyers outside the United States — and that this demand will keep expanding,” Miran said.
“Stablecoins could soon become a multitrillion-dollar elephant in the room for central bankers,” he added.
Global institutions, including the International Monetary Fund, have cautioned that stablecoins may pose risks to traditional financial systems, potentially drawing customers away from banks and other financial services. In the U.S., banking associations have similarly called on Congress to tighten oversight, particularly for yield-bearing stablecoins that could compete with traditional deposits.
Regulation paving the way
In his remarks, Miran praised the GENIUS Act for providing clear regulatory standards and consumer protections, emphasizing that a well-defined framework will be key to encouraging wider adoption of stablecoins.
“Although I usually approach new regulations with skepticism, I’m very encouraged by the GENIUS Act,” he said. “It offers a structure that gives stablecoins a level of legitimacy and accountability comparable to traditional dollar assets.”
“For the purposes of monetary policy, the most important aspect of the GENIUS Act is that it requires U.S.-domiciled issuers to maintain reserves backed on at least a one-to-one basis in safe and liquid US dollar–denominated assets.”
