Federal Reserve Proposes Framework for Stablecoin Classification

Researchers at the Federal Reserve have proposed a framework for classifying stablecoins and other blockchain-based financial products within U.S. money supply statistics.

The study, published on September 4, examined payment stablecoins, tokenized bank deposits, and tokenized money market funds to determine how they could fit into M1 or M2.

Payment stablecoins could be classified as either a medium of exchange (M1) or a short-term savings product (non-M1 portion of M2), depending on their dominant use. The researchers used USDC as the closest existing comparison, noting that few payment stablecoins currently operate under the GENIUS Act framework.

However, adding stablecoins to M1 or M2 would not be as simple as counting every token in circulation, as issuers hold reserve assets supporting those tokens. These reserves can contain bank deposits, Treasury bills, and other permitted liquid instruments, which may already appear elsewhere in the monetary aggregates.