Fed Warns Rise in Stablecoins Could Lower Neutral Rates
Federal Reserve Governor Stephen Miran warned that rising demand for dollar-pegged stablecoins could increase loanable funds supply and push the Fed’s neutral rate lower.
Research cited by Miran projects the stablecoin market—from $310.7 million now to $1–3 trillion by 2030 or $3 trillion in five years—might lower rates by up to 40 basis points.
A key channel is reserve management: Tether’s $98 billion in Treasury bills accounted for 1.6% of short-term Treasuries in Q1 2025, helping to depress front-end yields.
Miran highlighted the need for regulatory clarity, praising the GENIUS Act’s full-dollar reserve rules and consumer protections, and noted Canada’s plan for a 2025 national stablecoin framework.
As stablecoins expand beyond payments, the Fed will closely watch their macroeconomic impact on bank funding, money markets and Treasury demand.
Neutral
In this context, the news primarily concerns macroeconomic factors driven by stablecoin demand rather than a shift in the underlying asset’s value proposition. Although rising demand for stablecoins indicates sector growth, it does not directly affect the price peg of Tether (USDT), which remains near $1.00. In the short term, traders can expect stable liquidity conditions as Tether continues to supply US dollar–backed tokens without price fluctuations. Over the long term, regulatory clarity and expanded adoption may enhance market infrastructure and trading volumes, but they are unlikely to move the stablecoin’s price away from its peg. Therefore, the overall impact on USDT’s price is neutral.