U.S. Federal Reserve Governor Stephen Miran warned that the rising adoption of dollar-pegged stablecoins could have a notable impact on interest rates and monetary policy.
Speaking at the Blockchain Venture Capital Conference in New York, Miran argued that as stablecoins expand, they may exert downward pressure on the neutral interest rate, or r-star, the theoretical level at which the economy neither accelerates nor slows.
“Stablecoins may become a multitrillion-dollar elephant in the room for central bankers,” he said, pointing that their rapid growth could influence broader macroeconomic conditions.
Impact on treasury demand
Miran explained that stablecoins are already affecting demand for U.S. Treasury bills and other dollar-denominated liquid assets, particularly among investors outside the United States.
Currently, the total market capitalization of all stablecoins stands at around $311 million, according to CoinGecko.
Fed research, however, projects that the market could expand to as much as $3 trillion within the next five years, potentially making stablecoins a significant consideration for liquidity management and monetary policy decisions.
As I mentioned earlier, projections indicate between $1 trillion to $3 trillion of growth in stablecoins over the next several years. Adoption depends on regulatory clarity, institutional integration, and factors emanating from outside the U.S.—for instance, growth in EMEs, foreign exchange fluctuations, foreign political stability, and so forth.
Global concerns
The International Monetary Fund and U.S. banking groups have warned that these digital assets could compete with traditional banking products, attracting depositors who might otherwise hold funds in conventional accounts. This shift could challenge financial stability if the stablecoin market grows too quickly without proper oversight.
Miran also praised the GENIUS Act, a U.S. legislative initiative aimed at providing regulatory clarity for stablecoins, as a key factor in fostering broader adoption. The Act requires U.S.-based stablecoin issuers to maintain reserves on a one-to-one basis in safe, liquid, dollar-denominated assets.
“While I generally approach new regulations with skepticism, I’m encouraged by the GENIUS Act,” Miran said.
The Fed governor noted that the growing demand for stablecoins could push down the neutral rate, prompting the central bank to lower interest rates accordingly.
“It establishes the stability and transparency necessary for stablecoins to function like traditional dollar assets, which in turn could influence the Fed’s policy decisions. For monetary policy, the most important aspect is that U.S.-domiciled issuers maintain fully backed reserves.”
In theory, a lower r-star reduces borrowing costs across the economy, potentially stimulating investment and consumption. If stablecoins continue to expand rapidly, their influence on liquidity and capital flows could be substantial.
Regulatory attention
As crypto markets continue to grow, attention is increasingly shifting from high-profile tokens and mining innovations to the broader infrastructure supporting digital finance.
The Bank of England plans new rules for large-scale stablecoins, including temporary holding limits for individuals and businesses, while smaller issuers fall under lighter oversight. Officials stressed coordination with U.S. regulators to ensure consistent global standards and that on both sides of the Atlantic they are watching stablecoins closely as they expand in scale and significance.
Oleksii Shumak
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