During a conference held on May 31, Federal Reserve Governor Christopher Waller reported that stablecoins widen the reach of US monetary policy, while Bank of England policymaker Megan Greene anticipates their popularity may likely diminish soon. Waller further noted that the increasing use of dollar-backed stablecoins could strengthen the global influence of US monetary policy. It is structured to maintain a stable value, have increased in popularity in recent years, and a subsequent rise is still projected after issuance has stabilized in recent months.
According to a Bloomberg News report from the 32nd Dubrovnik Economics Conference, Waller pointed out that countries increasingly dependence on US dollar-backed stablecoins could effectively import US monetary conditions.
In remarks stated by Reuters’ report, Waller highlighted that stablecoin as payment instruments are not inherently harmful or risky and may improve competition within the financial sector.
Conversely, Greene suggested that stablecoins could drop out of relevance within a few years. She added that tokenized deposits are likely to take over from stablecoins, noting that the result of this discussion may serve a clearer purpose within the next five years.
Waller also pointed out that interest in central bank digital currencies (CBDCs) has declined over the central banks. Meanwhile, Greene described the emerging landscape as a race between three aspirants: CBDCs as the “tortoise,” stablecoins as the “hare,” and tokenized deposits as the “rhino.” She signaled a preference for the “rhino,” noting that tokenized deposits have strong growth potential.
The advancement of the Digital Asset Market Clarity Act, a crucial part of cryptocurrency legislation remains under review in the U.S. senate and remains to encounter delays due to continuous disagreement over the U.S. stablecoins yield policies.
Regarding the most significant regulatory proposals for the digital asset industry, the bill encounters an ambiguity path toward the adoption in 2026. Opposition from the banking sector, combined with the political landscape adjacent in the upcoming U.S. midterm elections, remains to weigh on its prospects.
The CLARITY Act, which targets to develop a standard federal regulatory framework for digital assets, passed through the Senate Banking Committee on May 15 after extensive negotiations across banking institutions and crypto industry stakeholders regarding the allocation in connection to stablecoin yields. Despite this progress, the legislation remains secure approval from both chamber of Congress prior the presented to the President for signature.
Recently, Senator Cynthia Lummis warned that the United States risks yielding its competitive advantage in the digital asset sector to other nations, such as China, if lawmakers fail to advance the legislation prior the end of the year. She stated that the United States develops the dollar-centric financial system that has backed global stability. Also, she further noted that the Clarity Act is designed to help shape the next generation of the system, highlighting that firm action is required prior to Beijing taking the lead.