Director Waller calls on the Federal Reserve to open innovation and support digital assets and stablecoins

According to the Zhitong Finance APP, Federal Reserve Governor Christopher Waller stated on Wednesday at the Blockchain Summit in Wyoming that the Federal Reserve should continue to support technology and innovation, especially in emerging areas such as digital assets and artificial intelligence, to modernize the U.S. payment system and promote economic growth. Hours before Waller's speech, the Federal Reserve released the minutes from the July monetary policy meeting, which mentioned stablecoins for the first time.

Waller pointed out, "This is why the Federal Reserve must continue to embrace technological advancements, modernize its services, and support innovation in the private sector." He emphasized that the collaboration between the Federal Reserve and the private sector can jointly strengthen the stability and efficiency of the U.S. payment system.

Recently, the Federal Reserve has shown a significant change in its regulatory attitude towards crypto assets and related businesses. Over the past few months, the Federal Reserve has gradually stepped back from special regulations on banks involved in crypto businesses and removed the "reputational risk" classification from bank reviews, which the market sees as an important victory against "crypto de-banking." In April of this year, the Federal Reserve also withdrew previous guidance discouraging banks from participating in cryptocurrency and stablecoin businesses.

Federal Reserve Vice Chair Lael Brainard emphasized at the same event on Tuesday that banks and regulators need to maintain an open mindset towards new technologies, rather than falling into "overly cautious thinking patterns."

According to the minutes from the July FOMC meeting, some participants believed that fiat-backed stablecoins "could enhance the efficiency of the payment system" and potentially increase demand for the underlying assets (including U.S. Treasuries). However, the meeting also emphasized that stablecoins could have broader implications for the banking system, financial stability, and the implementation of monetary policy, thus requiring ongoing attention and prudent regulation.

Nate Geraci, president of NovaDius Wealth, commented on social media platform X, "The Federal Reserve discussed stablecoins in the meeting minutes, yes, stablecoins." This is seen by the market as a significant signal regarding the Federal Reserve's approach to digital currency policy.

In his speech, Waller further called for the Federal Reserve and the private sector to jointly embrace the "technology-driven revolution" propelled by artificial intelligence, tokenization, smart contracts, and distributed ledgers. He believes that these technologies are not to be feared, even if they appear in the decentralized finance world, as they are essentially just new ways to transfer assets and record transactions.

Waller emphasized that if decentralized finance can effectively control risks within the payment system, it could significantly enhance payment efficiency. He stated, "Today's technology may be new, but using innovation to build payment services is not a novel concept."

Last year, the Federal Reserve launched the long-awaited instant payment network FedNow, allowing eligible banks with Federal Reserve accounts to achieve real-time fund transfers. This initiative has helped the U.S. catch up with the rapidly developing real-time payment systems globally.

Waller revealed that the Federal Reserve is continuously researching a new round of financial technology innovations, including tokenization, smart contracts, and the application of artificial intelligence in the payment system. He believes that both the public and private sectors can play roles in their respective fields to jointly promote the innovation of payment infrastructure and the financial system