Fed Governor Warns Stablecoin Boom Could Push Down US Interest Rates

Federal Reserve Governor Stephen Miran, in a speech at the BCVC Summit on November 7, 2025, highlighted the potential macroeconomic impact of stablecoins, suggesting that their rapid growth could influence U.S. interest rates.

Miran stated that stablecoins, which are dollar-pegged digital assets, could see adoption reach between $1 trillion and $3 trillion by the end of the decade. This scale is comparable to the Fed's COVID-era stimulus purchases and could make stablecoins a significant buyer of U.S. Treasury securities, with under $7 trillion in Treasury bills outstanding today.

Research cited by Miran estimates that widespread use of stablecoins backed by U.S. securities might lower the neutral interest rate, or R*, by as much as 40 basis points. This shift could prompt the Federal Reserve to set lower policy rates than otherwise to avoid unintentionally contractionary monetary policy.

For instance, Tether, a major stablecoin issuer, held an estimated $98 billion in Treasury bills by Q1 2025, accounting for about 1.6% of outstanding T-bills. Such purchases have been linked to lower short-term yields, demonstrating the real effects on front-end rates.

Miran emphasized the importance of regulatory clarity, praising proposals like the GENIUS Act, which requires stablecoin issuers to hold safe, liquid dollar assets. However, he warned that if issuance merely repackages existing dollar holdings, the impact on loanable funds would be minimal. Policymakers must balance the boost to dollar demand against potential strains on banks, money markets, and the Treasury market.

The growth of stablecoins is reshaping global finance, with data showing they processed $46 trillion in transactions over the past year, a 106% increase from 2024, and now rival traditional payment systems like Visa and PayPal. More than 1% of all U.S. dollars in circulation exist in tokenized form on public blockchains.

Miran compared this trend to the early-2000s global savings glut, which depressed interest rates worldwide, and cautioned that central bankers will need to consider stablecoin demand as part of monetary policy decisions moving forward.