Stablecoins may grow into a huge part of the financial world, but they’re not about to replace traditional bank deposits — at least not according to U.S. Federal Reserve Governor Stephen Miran.
Speaking at the BCVC Summit in New York, hosted by Bloccelerate VC, Miran said he doesn’t see people moving large amounts of money from banks to stablecoins, even if their use grows to as much as $3 trillion by the end of the decade.
“Because GENIUS Act payment stablecoins don’t offer interest and aren’t protected by federal deposit insurance, I don’t see much risk of people pulling money out of banks,” Miran said.
Stablecoins Could Reach $3 Trillion
Stephen Miran, who was appointed during the Trump administration, said the Fed’s research shows that stablecoin adoption could reach between $1 trillion and $3 trillion by 2030. He further noted that such growth would render stablecoins a multitrillion-dollar elephant in the room to the central bankers.
The American Bankers Association (ABA) has warned that some stablecoin projects might try to offer indirect interest payments, which would go against the new GENIUS Act. The ABA is asking regulators to make sure no third parties or exchanges can get around this rule. The GENIUS Act, passed by Congress in July, is the new law that sets the rules for U.S. payment stablecoins.
More Demand for U.S. Treasuries
Stephen Miran also noted that if stablecoins continue to be backed by U.S. government securities, demand for Treasury bills could rise sharply. He reminded that the Fed’s own Treasury holdings grew by over $3 trillion during the pandemic.
“The additional demand from stablecoins would be too big to ignore if these forecasts are correct,” he stated.
Calls for Lower Interest Rates
Stephen Miran again said the Federal Reserve should lower interest rates — a message that lines up with former President Trump’s views. He explained that as stablecoins grow, the amount of money available for loans may increase, putting pressure on the neutral rate, also known as R-star.
When the level of R-star is lower, he said that the rates should also be lower to maintain a healthy economy.
Research from 2024 that Miran cited found that if stablecoins become widely used and are fully backed by U.S. assets, interest rates could drop by as much as 40 basis points.
Global Use for Stablecoins
Stephen Miran also pointed out that in some countries, people have limited access to U.S. dollars and other reserve assets. Stablecoins, he said, could help people in those regions gain access to dollar-based financial tools.
“The real opportunity in stablecoins is to serve people in places where dollar access is limited,” Miran said.
In short, stablecoins may not threaten American banks, but they could open new doors for people around the world who want easier access to U.S. dollar assets.
*Image source: Stefani Reynolds | Bloomberg
Also Read: XRP Shows a Big Buy Signal — Can It Reach $2.5 Soon?
