In a speech at 2025 D.C. Fintech Week, Federal Reserve Board Governor Michael S. Barr assessed emerging payment technologies, with a focus on stablecoins, and argued that any efficiency gains in areas such as cross-border payments will depend on strong supervisory and consumer protection guardrails under the recently enacted GENIUS Act. Barr highlighted potential stablecoin use cases in remittances, trade finance and multinational treasury management, but warned that stablecoins’ bearer-instrument features and use on permissionless networks create acute anti-money-laundering and counter-terrorist-financing challenges, even as AI, ISO 20022 payment data (including on Fedwire), trusted identity tokens and smart-contract controls could support compliance. On financial stability, he emphasised run risk where instruments promise redemption at par on demand but are backed by non-cash or stress-sensitive reserves, and pointed to implementation issues in the GENIUS Act that could undermine resilience without careful rule design, including allowable reserves such as uninsured deposits and certain overnight repo constructs that could embed exposure to volatile “foreign legal tender” assets. He also flagged risks of regulatory arbitrage given multiple potential primary supervisors, the scope for issuers to seek broader “digital asset service provider” activities, carve-outs from consolidated capital requirements for bank-affiliated issuers, and the use of uninsured trust-bank charters for bank-like principal activities, alongside gaps around products marketed as “stablecoins” outside the act and the absence of traditional payment fraud protections. The speech pointed to forthcoming federal and state rulewriting and supervisory coordination as central to closing these gaps, and suggested that tokenized deposits merit attention as an alternative that sits within the established bank regulatory framework, including deposit insurance and access to central bank liquidity.

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