Fed's Waller urges embrace of innovation as central bank's FOMC discusses stablecoins

The Federal Reserve should support technology and innovation, said Fed Governor Christopher Waller as the central bank shifts toward being more open to digital assets. 

Together, the private sector and the Fed help bolster the U.S. payment system, Waller said on Wednesday during the Wyoming Blockchain Symposium. Waller's comments came hours before the Fed released minutes from a meeting in July where stablecoins were discussed. 

"That is why it is important for the Federal Reserve to continue to embrace technological advancements to modernize its services and continue to support private sector innovation," Waller said. 

The Federal Reserve has taken several steps toward embracing crypto over the past few months, highlighting a shift in how it views digital assets. These steps include ending a program supervising banks involved in crypto and removing the "reputational risk" classification from bank examinations, which were viewed as a win against crypto debanking.

In April, the central bank also withdrew guidance that previously discouraged banks from participating in crypto and stablecoin activities. Michelle Bowman, the Fed's vice chair for supervision, spoke about the need for banks and regulators to be open to new technologies and depart from "an overly cautious mindset," on Tuesday in Wyoming. 

On stablecoins, the Fed suggested that fiat-pegged tokens could "improve the efficiency of the payment system," according to notes published on Wednesday from a July Federal Open Market Committee meeting. "They also observed that such stablecoins could increase the demand for the assets needed to back them, including Treasury securities."

That said, the Fed appears more than willing to listen to concerns that stablecoins "could have broader implications for the banking and financial systems as well as monetary policy implementation," and thus warrant continued attention and monitoring, according minute notes.

Nate Geraci, president of NovaDius Wealth, noted the minutes in a post on X. 

"Latest FOMC minutes show Fed discussed stablecoins during July meeting … That’s right," Geraci said. "Stablecoins."