On February 12, Fed Member Christopher Waller spoke at a stablecoin conference. He emphasized stablecoins must demonstrate both a “clear use case and … a clear commercial case to be economically viable.” (Italics omitted.) A use case attracts consumers and businesses, while a business model is necessary for stablecoin issuers to continue operating.

Stablecoins are digital assets designed to maintain a stable value relative to a national currency, with most pegged to the U.S. dollar, making them “synthetic” dollars. This allows stablecoins to serve as a medium of exchange and a unit of account within the crypto asset ecosystem. Waller addressed the need for a clear regulatory regime for stablecoins in the U.S., emphasizing safety and soundness. Waller stated the stablecoin market would benefit from a regulatory framework allowing both non-banks and banks to issue regulated stablecoins.

Waller’s remarks also explored the potential use of stablecoins in retail payments, although their current use remains limited. Scaling stablecoins in retail payments would require a significant shift in consumer preferences and business investments, and such use would take years to materialize.