Stablecoin Boom Could Hit US Interest Rates, Warns Fed’s Stephen Miran

United States Federal Reserve Governor Stephen Miran said rising stablecoin demand could influence future US interest rates.

Speaking at the BCVC summit in New York on Friday, the Donald Trump–appointed official argued that dollar-pegged crypto tokens may already be “putting downward pressure” on the neutral rate, or r-star, the level that neither speeds up nor slows the economy.

Miran said that if the neutral rate trends lower, the central bank would respond over time with lower policy rates as well. He tied this shift to how US dollar stablecoins channel global demand into US Treasury bills and other liquid dollar assets.

Stablecoin demand and US interest rates

Miran linked stablecoin demand to growing purchases of US Treasury bills by stablecoin issuers. These companies hold reserves in cash and short-term dollar assets to back their tokens.

As more users outside the United States hold dollar stablecoins, issuers need larger reserve portfolios. That demand adds to buying pressure in Treasury markets instead of passing only through traditional foreign investors.

Because higher demand for US Treasury bills can push yields lower, Miran said this process may press down the neutral rate and, in turn, shape US interest rates over time.

Stablecoin demand and the path to a multitrillion market

According to CoinGecko data cited in the speech, the combined stablecoin market cap stands near $310.7 million. Miran said Federal Reserve research sees room for much faster growth.

He noted that this research projects the sector could reach up to $3 trillion in value within the next five years. That scale would place stablecoin demand alongside other large pools of dollar-denominated assets.

“My thesis is that stablecoins are already increasing demand for US Treasury bills and other dollar-denominated liquid assets by purchasers outside the United States and that this demand will continue growing,” Miran said. He added that “stablecoins may become a multitrillion-dollar elephant in the room for central bankers.”

Stablecoin regulation, banks, and global watchdogs

International organizations have raised separate concerns about rising stablecoin demand. The International Monetary Fund (IMF) has warned that stablecoins can challenge some traditional financial services, since they offer dollar access and payments in digital form.

As a result, stablecoins may compete with deposit products, transfers, and other bank-linked services that currently sit inside the regulated banking system. This competition has drawn attention from supervisors that focus on financial stability and consumer protection.

In the United States, banking groups have urged Congress to tighten stablecoin regulation, especially for products that offer yield. They argue that such tokens could pull in customers who might otherwise use banks, while not facing the same capital, liquidity, and oversight rules.

GENIUS Act ties stablecoin regulation to reserves and US interest rates

Miran also highlighted the role of the GENIUS Act in shaping stablecoin regulation in the United States. He said clear rules could support broader adoption while keeping reserves in safe assets.

“While I tend to view new regulations skeptically, I’m greatly encouraged by the GENIUS Act,” Miran said. He added that this “regulatory apparatus for stablecoins establishes a level of legitimacy and accountability congruent with holding traditional dollar assets.”

He then pointed to what he called the most important part for monetary policy. “For the purposes of monetary policy, the most important aspect of the GENIUS Act is that it requires U.S.-domiciled issuers to maintain reserves backed on at least a one-to-one basis in safe and liquid US dollar–denominated assets.”

Because those reserves typically include US Treasury bills and similar instruments, Miran’s comments linked stablecoin regulation, the GENIUS Act, and stablecoin demand directly to demand for government debt and, by extension, to the background level of US interest rates.