Passage of a new regulatory framework for stablecoins likely won’t lead to a flood of bank customers pulling their money out of deposit accounts and into the digital currency, Federal Reserve Governor Stephen Miran said today.
During a speech on the implications of stablecoins for monetary policy, Miran discussed the recently enacted Genius Act and what it may mean for the U.S. economy. He noted there was concern that the law could destabilize U.S. banks if large numbers of depositors instead put their money into stablecoins, but he didn’t see that as a likely outcome.
“Because Genius Act payment stablecoins do not offer yield and are not backed by federal deposit insurance, I see little prospect of funds broadly fleeing the domestic banking system,” Miran said.
The Genius Act bans payment stablecoin issuers from paying interest or yield on payment stablecoins, but the restriction can be bypassed when exchanges or other affiliates offer yield or rewards to stablecoin holders. The American Bankers Association and state bankers associations have called on lawmakers to strengthen the law by expanding the prohibition to cover digital asset exchanges, brokers, dealers and affiliated entities.
