Federal Reserve Bank Governor Christopher Waller expressed his support for the regulated adoption of stablecoins, suggesting that well-defined rules could enhance the US dollar's role as a global reserve currency. Waller, who oversees the Fed Board’s payments subcommittee, conveyed his stance during 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 new avenues for payment systems and, with appropriate regulation, can solidify the dollar's use in global trade, finance, and investment activities. His comments come at a time when the dominance of the US dollar is under scrutiny, with the BRICS coalition advocating for a shift away from the dollar in international trade.

According to an Andreessen Horowitz report from October, the US dollar constitutes over 99% of the total stablecoin currency shares, with Tether (USDT) being the most traded stablecoin, accounting for nearly 80% of the volume. Waller sees stablecoins as a beneficial addition to the payment ecosystem, provided they are subject to regulatory oversight to ensure full backing and proper authorization.

The discussion on stablecoins is particularly relevant as the US faces competition in its currency's international standing. Waller pointed out that stablecoins make it more challenging for other nations to diminish the dollar's reserve status due to the difficulty in controlling digital assets compared to physical currency.

In the context of stablecoin adoption, a Chainalysis report from October indicated that the US is trailing, with the market share of stablecoin transactions on US-regulated exchanges falling below 40% in 2024. Conversely, transactions on offshore exchanges have increased to 60%.

Legislative efforts are underway to establish a regulatory framework for stablecoins, as evidenced by US Senator Bill Hagerty's introduction of the GENIUS stablecoin bill on February 4. The proposed legislation outlines a structure where stablecoins are recognized as digital assets tied to the US dollar, with Federal Reserve oversight for issuers with market caps exceeding $10 billion, while state-level regulation 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 witnessed significant growth, surpassing a $200 billion market capitalization in January and seeing widespread adoption in 2024, with transaction volumes reaching $27.6 trillion, overtaking the combined volumes of Visa (NYSE: V ) and Mastercard (NYSE: MA ).

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