Federal Reserve Chairman frontrunner Waller: Cryptocurrency technology "is nothing to be afraid of," the Federal Reserve should promote payment innovation together with the industry

Ahead of the Jackson Hole Global Central Bank Annual Meeting, the cryptocurrency sector is holding a blockchain seminar in Jackson Hole, with officials from the Federal Reserve, SEC, and Donald Trump's son in attendance. Christopher Waller, one of the popular candidates for the next Federal Reserve Chair and a Federal Reserve Governor appointed by President Trump, spoke at the conference on Wednesday, calling for embracing the "technology-driven revolution" occurring in the fields of artificial intelligence and stablecoins, believing it can drive the development of the U.S. economy.

In his speech, Waller stated that digital asset innovation is "not something to be feared," and that the payment system is undergoing a "technology-driven revolution," with current advancements in computing power, data processing, and distributed networks giving rise to many innovative payment services.

"When thinking about smart contracts, tokenization, or distributed ledgers, there is nothing to be afraid of."

"The technology we have today may be new, but using innovative technology to build new payment services is not a novel idea."

Supporting the Federal Reserve's Collaboration with the Industry in Payments

Waller was appointed by Trump in 2020. He has previously stated his support for the application of certain technologies in decentralized finance (DeFi), believing it can complement the traditional payment system. For example, he mentioned that distributed ledger technology can record asset transfer processes more efficiently and quickly.

In his speech on Wednesday, Waller emphasized that the impact of DeFi in the payment sector, including its risk mitigation role, could yield positive outcomes under the premise of collaboration between the private sector and the Federal Reserve. He stated that both the public and private sectors can embrace innovation in their respective roles.

He noted that in recent years, some of the most groundbreaking innovations have been "stigmatized" due to their association with digital assets.

"These are just technologies; why are they so bad? If these technologies can lead to more practical and interesting applications, we should study and adopt them."

Media analysis suggests that cryptocurrency companies are weighing a key strategic question: how much control to retain in the circulation mechanism of digital currencies, whether to build an entirely new system, rely on a shared system, or a combination of both.

In response, Waller stated that the evolution of payment systems has always been driven by technological advancements, with most changes led by private sector innovations, while the Federal Reserve supports the critical infrastructure—either as a system operator providing core infrastructure or guiding the industry in establishing payment standards and other specific solutions.

"This complementary relationship has made the U.S. payment system secure and efficient, becoming a backbone of domestic and international business activities. Therefore, the Federal Reserve must continue to embrace technological advancements, modernize services, and continuously support private sector innovation."

The Federal Reserve is Researching Tokens and AI Technology in Payments

The Federal Reserve launched the long-awaited payment network FedNow in 2023, allowing eligible banks with accounts at the Federal Reserve to achieve instant fund transfers. Prior to this, the U.S. had somewhat lagged behind other countries in promoting real-time payments Waller stated that the Federal Reserve is exploring a new round of payment technology innovations, including tokenization, smart contracts, and the application of artificial intelligence in payments.

"As a central bank, we may never go down this path, but there is no reason not to explore and see what happens."

Waller said that as operators of the payment system, understanding these trends is crucial, as it can help the Federal Reserve better support private enterprises using the relevant infrastructure and assess whether emerging technologies have the potential to improve the Federal Reserve's existing platforms and services.

"In fact, I believe the Federal Reserve should further strengthen its interaction with industry innovators, especially in the context of the increasing integration of traditional finance and the digital asset ecosystem. We are exploring how to advance this work, so stay tuned."

The Wyoming Blockchain Summit is held three days before the global central bank annual meeting in Jackson Hole. Analysts say this summit marks the peak of what Goldman Sachs previously described as the "summer of stablecoins."

Waller is also the second Federal Reserve official this week to publicly praise the cryptocurrency industry. The day before Waller's speech, Federal Reserve Vice Chair for Supervision Michelle Bowman also stated at the summit that banks and regulators should treat the industry better and praised the development of tokenization.

A previous article from Wall Street Insight stated that Bowman mentioned in her speech on Tuesday that the banking industry and regulators must embrace the benefits brought by new technologies such as artificial intelligence and cryptocurrencies, or they risk diminishing roles in the economy. She stated that ideally, regulators should allow these new uses to "expand in a way that benefits the banking system."

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