Fed Governor Warns Stablecoins Could Become “Multitrillion Dollar Elephant in the Room”

TLDR

• Federal Reserve Governor Stephen Miran said stablecoin growth could reach $1 trillion to $3 trillion by 2030, affecting U.S. monetary policy decisions.
• Miran stated that stablecoins could put downward pressure on interest rates by increasing the supply of loanable funds in the economy.
• He expects most stablecoin demand to come from foreign users without access to dollar-denominated savings, strengthening the U.S. dollar.
• The GENIUS Act became the first major U.S. crypto law, establishing regulations for stablecoin issuers like Tether and Circle.
• Miran said stablecoins are a “force to be reckoned with” that could have economic consequences for the Fed’s monetary policy.

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Federal Reserve Governor Stephen Miran made his first public statements about cryptocurrency since joining the central bank in September. Speaking at the BCVC Summit 2025 in New York on Friday, he focused on how stablecoins might affect U.S. monetary policy.

Miran presented projections showing stablecoin adoption could reach between $1 trillion and $3 trillion by the end of the decade. These estimates come from Federal Reserve staff analysis. The governor called stablecoins “a force to be reckoned with” during his speech and panel discussion.

The Fed governor compared these projections to current Treasury bill supply. Less than $7 trillion in Treasury bills are outstanding today. If stablecoin forecasts prove accurate, the demand from this sector will be too large to ignore.

Miran served as chair of the Council of Economic Advisers under President Donald Trump before his Fed appointment. He remains on leave from his White House position while serving as Fed governor. The Senate confirmed him in September.

The governor addressed concerns from bankers about stablecoins draining U.S. bank deposits. He said he thinks this is unlikely to happen. The new GENIUS Act does not directly allow for yield on stablecoins.

Foreign Demand and Dollar Strength

Miran expects most stablecoin demand to come from foreign users. These users currently cannot access dollar-denominated saving instruments. This shift would boost demand for dollar assets.

He explained that if foreign currency flows into dollar-backed stablecoins, it will make the dollar stronger. This effect might require a response from monetary policy. The Fed must consider its price stability and maximum employment mandates.

The GENIUS Act became the first major crypto law in the United States. It establishes regulations for stablecoin issuers such as Tether with USDT and Circle with USDC. The law’s full name is the Guiding and Establishing National Innovation for U.S. Stablecoins Act.

Impact on Interest Rates

Miran said widespread stablecoin use could push down interest rates. The tokens would increase the net supply of loanable funds in the economy. This affects r-star, the neutral rate of interest when the economy is at full employment and stable inflation.

If r-star is lower, policy rates should also be lower to support a healthy economy. Miran has called for rate cuts in recent statements. On Thursday, he said he expected rate cuts in December, according to Reuters reporting.

The governor suggested U.S. financial infrastructure could “use a reboot.” He believes dollar-backed tokens might provide this update. Stablecoins could facilitate dollar holdings and payments both domestically and abroad.

Miran appeared less certain about the future of other cryptocurrencies. He acknowledged that innovation is happening across the crypto sector. This innovation is starting to have economic consequences that matter for the Fed and monetary policy.

The governor called stablecoins an “area of enormous growth.” He said the forecasts and surveys he has reviewed support this view. Stablecoins serve as a steady component of trades and contracts in the crypto sector.

Miran joined the Federal Reserve during a period of tension over interest rate policy. President Trump has pushed for steeper rate cuts. Fed Chair Jerome Powell and other central bank leaders have pushed back against this pressure.

The governor’s comments mark the first time he has spoken publicly about cryptocurrency in his Fed role. His speech focused specifically on stablecoins rather than the broader crypto market. He emphasized the tokens’ potential to affect monetary policy decisions in coming years.

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