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Federal Reserve to Put Stablecoins at Center of October Payments Conference
Fed sets October 21 summit to examine tokenization, AI, and stablecoin business models as Congress advances digital asset regulation.
Fed Puts Stablecoins in the Spotlight
The U.S. Federal Reserve has announced a high-profile conference on October 21 to explore the future of payments innovation, with stablecoins taking center stage.
The event will bring together regulators, financial institutions, and technology leaders to discuss how tokenization, decentralized finance, and artificial intelligence could reshape the global payments system.
Federal Reserve Governor Christopher J. Waller described the conference as part of the Fed’s commitment to balance innovation with stability:
“Innovation has been a constant in payments to meet the changing needs of consumers and businesses.”
Conference Agenda: Tokenization, AI, and DeFi
The Payments Innovation Conference will feature panels on:
- Stablecoin business models and their role in global finance
- The convergence of traditional banking and decentralized finance
- Tokenization as a tool for transforming asset ownership and transfers
- Artificial intelligence in the payments sector
The event will be livestreamed on the Fed’s website, with further details to be released closer to the date.
Stablecoins Gain Ground in Financial Markets
The conference comes amid rapid growth in stablecoins, which now exceed $230 billion in circulation globally. Tokens such as Tether’s USDT and Circle’s USDC have become essential to crypto markets and are increasingly viewed as bridges to traditional finance.
Policymakers are weighing whether stablecoins could improve efficiency in payments—or risk destabilizing banking systems if they begin to replace deposits or disrupt existing financial infrastructure.
Shifting U.S. Regulatory Landscape
The Fed’s move follows Congress’ passage of the first federal stablecoin legislation in July, giving banks clearer rules for issuing dollar-backed tokens. Vice Chair for Supervision Michelle Bowman has urged regulators to take a more hands-on approach, even suggesting that Fed staff hold small amounts of crypto to better understand blockchain technology.
Bowman warned that an “overly cautious mindset” could leave the U.S. banking system less relevant, while tokenization could offer efficiency gains in asset transfers.
Fed Pulls Back Specialized Crypto Oversight
The October conference also comes against the backdrop of the Fed scaling back its oversight of banks’ crypto activities.
- In April, the Fed rescinded supervisory letters requiring banks to seek approval before engaging in stablecoin or crypto services.
- In August, it ended its Novel Activities Supervision Program, which had closely monitored banks’ digital-asset ventures.
The Fed said the program had achieved its goal of better understanding risks, while critics had called it a barrier to innovation.
Lawmakers like Senator Cynthia Lummis hailed the rollback as a victory over what she and others called “Operation Chokepoint 2.0.” President Donald Trump has also criticized excessive oversight, framing it as part of a “debanking” agenda.
Legislative Push for Clarity
At the same time, lawmakers have advanced several bills during “Crypto Week” in July:
- CLARITY Act – Distinguishes securities from commodities.
- GENIUS Act – Provides federal oversight for stablecoin issuers.
- Anti-CBDC Surveillance State Act – Blocks creation of a U.S. central bank digital currency.
Together, these moves reflect Washington’s pivot toward a more crypto-friendly policy environment.
Why This Matters
The Federal Reserve’s October conference signals a major step in placing stablecoins at the center of U.S. financial policy discussions. With Congress pushing forward legislation and the Fed scaling back restrictive oversight, the stage is set for a recalibration of how digital assets and traditional banking will coexist.
The outcome could shape not only the role of stablecoins but also the future of payments innovation in the U.S. and beyond.
@ Newshounds News™
Source: CryptoNews
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Lagarde Warns EU Stablecoin Rules Could Leave Europe Exposed
ECB chief calls for stronger legislation and global coordination to address liquidity risks in the fast-growing stablecoin market.
ECB Flags Stablecoin Risks
European Central Bank (ECB) President Christine Lagarde has urged lawmakers to accelerate legislative action to address vulnerabilities tied to stablecoins.
Speaking at the European Systemic Risk Board (ESRB) conference on Sept. 3, Lagarde cautioned that while stablecoins represent innovation, they also bring back long-recognized risks in new forms.
“The categories of risk they create are not new. They are risks long familiar to supervisors and regulators,” she said.
Liquidity as the Immediate Concern
Lagarde stressed that liquidity mismatches pose the most pressing threat. Stablecoin issuers often promise instant redemption at par value, even while investing in assets that may not be liquid enough to withstand sudden redemption demands.
- Such mismatches can trigger destabilizing runs.
- She pointed to the 2007 Northern Rock collapse in the UK as a cautionary tale, where a withdrawal demand of just 5% of assets triggered failure.
- By contrast, Tether managed redemptions of nearly 30% of its reserves in 2022 without collapsing, underscoring the varied resilience of issuers.
Weakness in MiCA Framework
Lagarde also flagged gaps in the EU’s Markets in Crypto-Assets (MiCA) regulation.
Under current “multi-issuance schemes,” an EU entity can issue fungible stablecoins jointly with a non-EU partner. However, MiCA requirements do not extend to the non-EU issuer.
This could mean:
- EU issuers bear disproportionate redemption pressure.
- Reserve adequacy may fall short during stress.
- The structure mirrors earlier problems in cross-border banking, where regulators imposed liquidity standards like the net stable funding ratio to prevent mismatches.
Without equivalent safeguards for stablecoins, Europe could become the weak link in global redemption flows.
Call for Stronger Legislation and Global Standards
Lagarde called on lawmakers to close loopholes by tightening rules around cross-border stablecoin schemes.
“We must take concrete steps now. European legislation should ensure that such schemes cannot operate in the EU unless supported by robust equivalence regimes in other jurisdictions and safeguards relating to the transfer of assets between the EU and non-EU entities,” she said.
She also emphasized the need for international coordination, warning that without global standards, risks could migrate to jurisdictions with the weakest protections—undermining European financial safeguards.
Why This Matters
Stablecoins have grown into a $230+ billion market globally, making them a central pillar of the digital asset economy. Lagarde’s remarks highlight Europe’s concern that without stronger protections, the EU could face disproportionate financial risk while becoming a regulatory soft spot in global markets.
@ Newshounds News™
Source: CryptoSlate
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Congress Prepares Market Structure Bill as Stablecoin and Tokenization Debates Intensify
Lawmakers return from recess with crypto regulation high on the agenda, building on the GENIUS and CLARITY Acts while the Fed prepares its October Payments Innovation Conference.
Congress Returns With Heavy Agenda
Crypto may be in its last quiet period before major regulatory activity begins in Washington. According to Ron Hammond, Head of Policy and Advocacy at Wintermute, this week could be the final lull before Congress moves forward with sweeping action on digital assets.
Lawmakers returned from recess in early September facing the threat of a government shutdown. Yet crypto remains near the top of the list. The Senate is preparing its own version of a market structure bill, aiming to define how digital assets are regulated in the U.S.
The House already passed the bipartisan CLARITY Act earlier this year, establishing clearer definitions between securities and commodities. The Senate, however, wants to draft its own approach. A first draft is expected by mid-to-late September, with committee review likely to follow in the fall.
Market Structure Bill: What to Expect
The House has worked on market structure proposals for nearly eight years, but the Senate only began serious hearings this year. Senators want greater ownership of the process, including revisiting definitions of ancillary assets and decentralization tests.
If momentum continues, a Senate vote could happen in late October or November, with the House potentially taking it up before year-end. That timeline means a bill could pass before Christmas—or be pushed into 2026.
TradFi vs. Crypto: The Tokenization Debate
Alongside market structure, tokenization of traditional assets is drawing sharper focus.
- Wall Street firms like Citadel have voiced skepticism, citing risks tied to tokenized securities.
- Firms such as Galaxy Digital, meanwhile, argue tokenization enhances efficiency and expands investor access.
- The SEC is expected to release guidance on tokenized equities, further intensifying the debate in Washington.
Banks Push Back Against Stablecoins
Stablecoins are another flashpoint. The House’s GENIUS Act, passed in July, provided a framework for dollar-backed stablecoin issuance. But banks are lobbying to go further, particularly against interest-bearing stablecoins.
- Banks fear these products could drain deposits from the financial system.
- Earlier compromises limited stablecoin issuers, but banks now want tighter restrictions extending to affiliates, brokers, and dealers.
- The crypto industry counters that stablecoins promote efficiency, transparency, and lower cross-border payment costs.
The Senate’s market structure draft is expected to revisit these issues, potentially expanding or refining GENIUS Act provisions.
Fed’s Role in the Debate
Congress is not acting in isolation. The Federal Reserve has scheduled a Payments Innovation Conference on October 21, where stablecoins will take center stage alongside tokenization and AI in payments.
The timing underscores how legislative and regulatory momentum are converging. As lawmakers debate new rules, the Fed is also exploring the risks and opportunities of stablecoin business models—signaling that digital asset oversight is becoming a coordinated priority across branches of government.
Global Context: Europe’s Stablecoin Alarm
The U.S. debate comes just as Europe raises its own red flags. Earlier this month, ECB President Christine Lagarde warned that gaps in the EU’s MiCA framework could leave Europe vulnerable to destabilizing redemption flows from cross-border stablecoin schemes.
- Lagarde urged lawmakers to close loopholes that allow non-EU issuers to sidestep European liquidity standards.
- She cautioned that without stronger safeguards, the EU could become the “weak link” in global financial stability.
- Her call highlighted the urgent need for international coordination on stablecoin rules.
While the U.S. is moving toward a pro-innovation stance with the GENIUS Act, CLARITY Act, and pending Senate bill, Europe is focused on tightening safeguards to prevent systemic risks. Together, these parallel moves show how both Washington and Brussels are racing to shape the next phase of digital asset regulation—but with sharply different priorities.
Odds of Passage
Prediction markets currently place the odds of a U.S. market structure bill passing this year at around 40%. Hammond, however, believes the chances are stronger, citing bipartisan momentum and the recent passage of both the GENIUS Act and CLARITY Act as proof that crypto legislation is finally gaining traction.
“The right people are talking,” he said, suggesting the Senate and House could align before year-end.
Why This Matters
The next few months could be decisive for U.S. digital asset policy. With the CLARITY Act clarifying asset classifications, the GENIUS Act establishing stablecoin oversight, and the Fed’s October conference spotlighting payments innovation, the stage is set for a comprehensive framework to emerge.
Globally, as Lagarde’s warnings underscore, the U.S. and EU are taking different but complementary paths—America leaning into innovation, Europe focusing on risk prevention. Together, these efforts may determine how stablecoins and tokenized assets reshape the financial system worldwide.
@ Newshounds News™
Source: Coinpedia
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