Fed Maps Stablecoin Path to M1 and M2

The Federal Reserve has released an analytical framework for classifying stablecoins as money, signaling that the central bank is preparing to measure the assets.

The framework categorizes stablecoins based on their primary function: if used as everyday mediums of exchange, they would align with M1; if held primarily as stores of value or for crypto trading, they would fall into non-M1 M2.

The central analytical hurdle identified by the staff is the risk of double-counting. Because stablecoins are typically backed by bank deposits, U.S. Treasury bills, or government money market funds, the underlying assets are already captured within existing M1 and M2 data.