Reed Luhtanen, Executive Director, FPC
Last month, the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act was signed into law, signaling the Administration’s continued focus on innovation around currency and payments in the United States, particularly digital currency. Offering important potential for faster payments, digital currency also has been a priority for the FPC, and we’ve been highlighting and educating the industry on digital currency, like stablecoins. In addition, we are evaluating the landscape to determine best practices and viable recommendations to support digital currency endeavors in the United States.
Case in point, our Digital Assets Work Group recently released its blog, Stablecoins for Faster Payments. The blog provides an overview of how stablecoins can enable faster and more efficient payments. Why is this the case? Because stablecoins combine the speed and transparency of blockchain technology with the stability of traditional currencies. In this way, stablecoins can address some of the key challenges faced by existing payment systems, like efficiency, cross-border accessibility, payment cost, and more. Stablecoins also can provide for increased transparency while also ensuring privacy and security, helping to reduce fraud and increase trust in payments. Stablecoins also enable instant 24x7x365 settlement, leading to cost savings and improved liquidity. These benefits make stablecoins a truly viable option to support payments advancement.
While this Digital Assets Work Group blog touts the value of stablecoins, it also suggests that financial institutions must play a key role to help ensure their success. The Work Group maintains that financial institutions are central to stablecoin adoption, as they provide the traditional financial controls and on/off ramps for the digital currency, as well as serving as a bridge with instant payment rails like RTP® and the FedNow® Service. To be ready to support stablecoins and their adoption, the Work Group recommends that financial institutions engage in activities like piloting stablecoin-to-cash solutions, exploring Fed Joint Accounts for reserve security, investing in KYC analytics, and more. By engaging in these initiatives, financial institutions can be ready to seize the opportunity, and lead the stablecoin payments revolution, making faster, efficient payments a reality.
In addition to the efforts of the Digital Assets Work Group, the FPC also recently hosted the educational webinar, Understanding Stablecoins: A Beginner’s Guide, with Barbara Hudgins, AAP, APRP, AFPP, CCRS, retired Director of Payments Education at ePayResources, and Chris Colson of the Federal Reserve Bank of Atlanta. The webinar provided an introduction to what stablecoins are, their different types, and how they are used for payments. It served as a primer, breaking down the basics to ensure foundational understanding so that we can continue building and growing knowledge of the value and benefits stablecoins bring to faster payments.
With the current Administration’s focus on stablecoins and other digital solutions, we can expect continued emphasis on modernizing—and expediting—payments in the United States. For our part at the FPC, we’ll continue driving momentum around digital currency, its applications, and other innovations, to make faster, efficient payments a reality.