# A Speech on Stablecoins with Michael Barr, Governor, Federal Reserve Board | DC Fintech Week 2025

- Channel: [DC Fintech Week](https://streameth.org/dc-fintech-week)
- Date: 2025-11-21
- Watch: https://streameth.org/watch/yt-O2LggniLQbY
- YouTube: https://www.youtube.com/watch?v=O2LggniLQbY

## Transcript

Welcome everyone to day two of DC FinTech week. My name is Chris Brummer. I'm going to be making a couple of of uh quick introductions before we have Governor Bar's speech. Um just a couple of uh operational notes for today. We are doing something that we have never done before. If you are a longtime visitor of DC Fintech week, which is we are having multiple events on multiple floors to create a very unique experience. Uh you know like uh fintech is about experimentation. Well uh I guess events uh this year is one big experiment. So any patience with us is helpful. This is a little bit of a proof of concept and we will refine it like any good startup uh over the next couple of years. Um just for uh note, if you go and you look at any of the QR codes on any of the floors, uh those QR uh codes will bring you to dcfintweek.org. If you go to the agenda page of dcfintweek.org, you will see what is happening. It'll first show you uh the AWS schedule and you scroll through and you can find everything that's happening. if you want to know on what floor or what area um uh our our programming will be taking place. And we have obviously quite a few very heavy hitters uh uh for the event. Um I did want to also introduce sort of a concept because I can't be uh multiple places in one time and no one would want to see me in the first place. So, I'm going to have a a couple of MC's CEOs for the different floors. Um, Adam Minard uh from Chainlink will will be guiding you through all of the days programming on this floor. Uh, where we will be dealing and delving into market into the uh uh market infrastructure of crypto into DeFi, decentralization, what that means. lots of stuff in the news in the in the last uh week or so and to kind of delve into those um issues. But um and we'll be ending very much on time for all these things uh because uh we're going to have a ton of people here and we want to be able to shuttle you from one floor to the other without getting too much of a traffic jam for the uh stairs. You will get your exercise in, but we have the air conditioning on so you'll be cooled off. Okay. Uh with with that uh I'm going to have just a quick one minute introduction because you guys don't want to hear from me, but it was helpful to know about the QR codes. I am delighted to kick off this very first iteration of our experiment with the man who knows a lot about experimentation that's going on uh in our nation's financial system. Uh my friend, my colleague, Professor Governor Michael Bar. Um we all know who he is. Uh and Michael as governor bar has seen um uh innovation uh taking place throughout the financial system from banks to protocols and I think and I thought that it was both extraordinarily generous for him to come. He's been here since even before his official capacity and now you are keeping that run up. So thank you so much Michael. I'm just uh governor bar I will just pass over the bar the the microphone to you. Thank you for [applause] >> uh as all of you know payments innovation has been accelerating. Stable coins, artificial intelligence, real-time payments and richer payment metadata offer significant improvements to the cost, speed and functionality of payments. Better payments functionality can help financial institutions and businesses manage liquidity more efficiently at lower cost. It can also mean that people receive their paychecks more promptly and manage their payments more efficiently. Payments innovation is especially important for lower income individuals who are often underserved by the financial system and lack financial slack. For the bulk of my remarks today, I want to focus on one kind of innovation, the benefits and risks of stable coins. Congress has recently passed legislation that provides some clarity to issuers of stable coins about how they can fit into the regulatory and supervisory framework. While there is a lot of work to do on the part of the government to fill in the specifics during the rulew writing process, increased certainty could lead to more rapid development of stable coins and related products and services for businesses and households. I want to start with some of the potential benefits of stable coins. The primary benefit comes from the ledger itself, which can operate globally and encode functionality and conditionality directly into assets and transactions. This functionality unlocks a range of new financial use cases that were previously impractical when transactions required updating a series of ledgers spread across individual financial institutions. The global nature of stable coins is fundamental to their usefulness in parts of the payment system that have high friction such as crossber payments. Some of these frictions are necessary and important such as those associated with complying with relevant laws and regulations on moneyaundering and terrorist financing. But removing or mitigating other frictions may reduce costs and facilitate more efficient transactions. While today stable coins are mostly used to facilitate crypto trading activities and secondarily as a dollar denominated store of value in some foreign jurisdictions. I want to provide some examples where stable coins may be useful for additional functions in crossber payments. For example, stable coins can be used to reduce the cost of remittances since it tends to be more expensive to send remittances to jurisdictions with less developed domestic payment systems. As of a few years ago, stable coins had only a limited ability to reduce costs because there were meaningful fees associated with on-ramping into stable coins and off-ramping out to local currencies. However, stable coin acceptance networks have arisen in some corridors that help reduce these fees and offer the potential to reduce the cost and increase the speed of remittances for those least able to bear these costs. Stable coins also have the potential to improve the speed of managing the paperwork and processes inherent in global trade and trade finance, perhaps with the use of smart contracts. In these applications, a digitally native form of payment could potentially be used to streamline the tracking and validation process that occurs between financial institutions, shipping companies, and customs warehouses, and the companies that engage in trade. Small businesses might see lower costs and greater access. And for larger firms that have entities across the globe, stable coins may help with treasury management. Stable coins offer the promise of near real-time global payments, helping multinational firms manage their cash efficiently between their related entities while still making payments through local internal entities in different countries, reducing costs and improving liquidity. I have mentioned just a few of the potential ways in which stable coins can provide benefits to households and businesses. Continued investment in technology can also support compliance with important legal restrictions that prevent the use of the financial system for nefarious purposes. This investment will be a key area necessary for supporting stable coins in achieving their potential benefits. Let me start with moneyaundering and terrorist financing. One unique feature of stable coins is their role as bearer instruments, similar to old-fashioned travelers checks, but mostly operating on global permissionless networks that can include plenty of users with bad intentions. That creates particular challenges for preventing moneyaundering and terrorist finance since bad actors can purchase stable coins in secondary markets that may not have customer identification requirements. The US puts a heavy premium on ensuring that all financial institutions comply with rules that seek to prevent criminals and terrorists from using our financial system. Financial companies, particularly banks that take shortcuts on anti-moneyaundering compliance, sooner or later come to regret those shortcuts. Compliance with bank secrecy act and anti-moneying requirements can be very data inensive and costly requiring significant staffing to identify and then address or resolve flagged issues. Permissioned networks with only trusted nodes doing the know your customer work can reduce the risk. Moreover, new technologies used with care can potentially re reduce frictions on legitimate payments and speed up the identification of problem payments. AI may be well suited to flag payments that are outliers relative to typical patterns, potentially reducing the volume of false positives and unnecessary filings. There may also be ways to improve the explanability of payments if they travel through the payment cycle with more data elements such as those in ISO2022 standards recently implemented on Fedwire. There are also technologies that can aid with stable coin compliance such as trusted identity tokens and wallets that satisfy customer identification program requirements and smart contracts that freeze stable coins in problematic wallets. This suite of tools can also be used preventing other types of crime such as fraud. A second key area to consider is financial stability. Let me take a step back and explain why I'm focused on the financial stability risks of stable coins. Caution is warranted because of the long and painful history of private money created with insufficient safeguards. The fragility of private money is inherent in the way that it is created. Financial institutions issue liquid liabilities to the public that are redeemable on demand and at par, but issuers risk being ultimately unable to liquidate their assets promptly at par when facing run dynamics and market stress. Maturity and liquidity transformation can have social benefits by meeting the needs of the public for money-like assets and supporting the supply of credit to the real economy. However, for this social benefit to be durable, maturity transformation necessarily requires safeguards that address run risk. Looking at the long history of runs from private money is a helpful reminder of how these runs can happen and what's at stake when they do. For example, in the 1800s during the so-called free banking era, the United States has competing forms of private money in the form of banknotes. The value of these notes was tied to the creditworthiness, location, and credibility of the issuing bank. Although some of the notes were backed by bonds issued by the state governments as well as other highquality liquid assets. Despite these protections, the quality of the guarantees backing the bank notes was not beyond question, and they often traded below par. Concerns about the health of issuing banks or of the states themselves in this era result in regular bank runs and in a number of instances widespread financial panics. The stability of the system was improved over time such as through legal changes that effectively required banknotes to be backed only by US government securities. Nevertheless, regular episodes of runs continued to materialize until the panic of 1907, which prominently featured a run on trust companies that offered deposit products backed by assets less liquid than the assets held by banks of the era. This episode led to the creation of the Federal Reserve system. The historical examples point out that issuing liquid liabilities redeemable but par but backed by assets even highquality ones about which creditors might have questions makes private money vulnerable to run risks. These same dynamics occurred in even in much more modern times. The most notable example is when the reserve primary fund broke the buck on se September 16th, 2008, one day after the bankruptcy of layman brothers as the assets backing the fund came into question. Pressures on money market funds also occurred in the onset of co 19 at the outbreak in March 2020 when institutional prime funds suffered outflows of about 30% of their assets under management within a period of two weeks. These experiences show the vulnerability of private money-like assets to runs and how these runs can threaten not only the financial sector but also the broader economy. The mostly unregulated stable coin market has also experienced run dynamics in recent times. While people purchasing something called a stable coin might reasonably assume that they can rely on redemption at par and on demand, unregulated stable coins are currently backed by a range of non-cash reserve assets that can make them vulnerable, especially under stress conditions. Three key features, redemption on demand, at par, and backed by non-cash assets render stable coins susceptible to run similar to fragile banks or money market funds. Because stable coins are not backed by deposit insurance and stable coin issuers do not have access to central bank liquidity, the quality and liquidity of their reserve assets is critical to their long run viability. At the same time, stable coin issuers traditionally retain profits from investing reserve assets and therefore have a high incentive to maximize the return on their reserve assets by extending the risk spectrum as far out as possible. Stretching the boundaries of permissible reserve assets can increase profits in good times, but risk a crack in confidence during inevitable bouts of market stress. The incentive to reach for yield can grow, especially in lower interest rate environments. Stable coins will only be stable if they can be reliably and promptly redeemed at par in a range of conditions, including during stress in the market that can put pressure on the value of or or otherwise liquid uh government debt and during episodes of strain on the individual issuer or its related entities. To address these vulnerabilities in the largely unregulated stable coin market, Congress passed the bipartisan Genius Act. The act's primary tool to mitigate the risk of runs is limiting permissible reserve assets to an itemized list of highly liquid assets. This is a significant improvement in an area where reserve assets for stable coins have been highly varied. Tight control over reserve assets coupled with supervision, capital and liquidity requirements and other measures could enhance the stability of stable coins and make them a more viable payment instrument over the long term. But success in accomplishing these goals will depend on the details of regulatory implementation. The Genius Act provides a helpful statutory framework, but it will be up to both federal banking agencies and the states to coordinate and develop a comprehensive set of rules that can fill in important gaps and ensure that there are robust guard rails to protect users of stable coins and mitigate broader risks to the financial system. Regulators have a lot of work to do to implement the act, and I'll outline several areas that will require close attention. For example, some of the enumerated reserve assets backing stable coins are not immune to stress. Permissible reserve assets include uninsured deposits, which were a key risk factor during the March 2023 banking stress. While the Genius Act permits regulators to limit the concentration of reserve assets in uninsured deposits, it will matter a lot how these rules are written. Additionally, in connection with overnight repo, the act permits any medium of exchange authorized or adopted by a foreign government to be held as a reserve asset, a category that could potentially include volatile assets. For example, until quite recently, El Salvador treated Bitcoin as legal tender, and it still specifically permits Bitcoin to be used for transactions on a voluntary basis. As a result, an issuer could argue that Bitcoin repo could qualify as an eligible reserve asset for a stable coin. In a case of a stress experienced by the issuer counterparty, or if Bitcoin were to drop sharply in value, a stable coin issuer could be stuck holding the Bitcoin that had declined in value, potentially compromising the one-toone backing of the stable coin liabilities. To the extent possible, regulation should be put in place to eliminate or minimize such risks. In addition to the potential vulnerabilities of some permitted reserves, other aspects of the Genius Act might permit risk to develop unless carefully regulated. The act permits four federal agencies and agencies in each state and territory to serve as the primary regulator and supervisor of stablecoin issuers. As a result, there might be a great deal of heterogeneity in the regulatory frameworks that apply to permitted issuers despite controls in the act intended to provide that the frameworks are substantially similar. The resulting array of charter choice options, unless carefully managed, may provide incentives for regulatory arbitrage. For example, the act permits federal and state regulators to authorize stable coin issuers to engage in a broad range of digital asset service provider and incidental activities other than stable coin issuance, including potentially acting as a crypto asset exchange or broker dealer. Issuers are likely to seek to stretch these activities limitations. In fact, issuers could argue that they are permitted under the act to perform the full range of activities conducted by FTX, provided that they make the relevant representations and conduct appropriate accounting. Unless state and federal agencies carefully coordinate, this could result in some state or federal regulators permitting a range of activities that might expose stable coin issuers to increased risk. The potentially broad set of permissible activities could raise heightened concerns in cases where stable coin issues are subsidiaries or affiliates of banks. In such cases, the risks of expanded activities could affect the banking organization and the banking system more broadly. These risks are especially elevated because the Genius Act carves stable coin issuers that are part of a banking organization out of bank and bank holding company consolidated capital requirements. even if they conduct a broad range of activities that pose risks that are greater than and different from those associated with stable coin issuance. Stable coin issuers are only subject to the capital requirements implemented under the act which could end up being too narrow to cover the risk of these expanded activities. Thus, appropriate capital requirements are another area where coordination among federal and state regulation is key and may be facilitated by the Genius Acts framework for assessing that state requirements are substantially similar to federal requirements. Relatedly, the act enables stable coin issuers, including those that may conduct an expanded range of activities to be chartered by regulators as uninsured national or state chartered trust banks. This authorization and related decisions by regulators may result in trust banks that engage in a broader range of non-fiduciary, non-custodial principal activities. Let us not forget a harsh lesson learned in the panic of 1907. A lighterw weight regulatory framework for trust chartered entities conducting bank-like activities can create opportunities for regulatory arbitrage and vulnerabilities for the financial system. Overall, these and other gaps may have implications for the safety and soundness of stable coin issuers. The act also has gaps related to consumer protection. For example, it does not apply to all instruments that are commonly referred to as stable coins, and certain dollar denominated tokenized products can continue to be offered and sold without being subject to the regulatory framework under the act. This risk creating confusion and could result in consumers relying on payment instruments that they believe are regulated, but which there are no credential protections of any kind. To mitigate this risk, federal and state regulators should work together to prevent misrepresentation, including through their authority to prohibit unfair and deceptive acts and practices. The act also lacks sufficient protections to prevent the mixing of bank-like activities in commerce, which could lead to an increase of economic concentration and create competitive distortions, potentially to the detriment of consumers. And finally, the act does not provide consumers with the fraud protections applicable to traditional payment instruments, including protection for unauthorized transfers. I have talked extensively about how the potential benefits of stable coins can only be achieved if stable coins can be reliably redeemed at par under our wide range of conditions. Importantly, the technology that supports stable coins can also be used for other products, for example, tokenized deposits. The benefits of tokenized deposits include that they are part of a regulatory framework that has been tested over time. Banks face robust regulatory and supervisory regimes proportional to their size and complexity. This supervision and regulation is paired with deposit insurance providing confidence that deposits held in sizes relevant for most retail purposes uh will be available on demand and at par. The resolution regime is orderly which provides additional confidence about the stability of the instruments in a wide range of circumstances and reduces contagion. Moreover, banks have ready access to the discount window where they can readily monetize assets on their balance sheets at a pre prespecified interest rate under a wide range of market conditions including the most dire. I don't want to say that this system is perfect. It is definitely not uh but it is far more robust than what we have developed so far for stable coins. Thus, it may make sense for both market participants and regulators to consider how tokenized deposits may fit into this ecosystem. As I said at the outset, stable coins have the potential to improve the efficiency of the payment system particularly in crossber applications. For stable coins to reach their potential, additional work is needed to create guard rails that protect households and businesses and the financial system as a whole. While the Genius Act made important progress in creating a framework for stable coins, a great deal will depend on how federal and state regulators implement it. If the regulatory framework provides strong guard rails and consumer protections, both the innovation represented by stable coins as payment instruments and the resulting competition in the payment space could help foster payments improvements that benefit households and businesses. Thank you very much. [applause] So, I'm going to be very uh efficient in the light of payments and also, you know, the fact that we uh uh uh started a little bit late and I'm not I'm just going to ask maybe one question and then uh if anyone has uh questions in the crowd, the fact that uh Governor Bar is available is is obviously a unique opportunity and resource and I'm sure there will be other questions. Um, just to kick it off, uh, what was really interesting, uh, and there were there was a lot in that speech, but just >> apologies. >> No, no, no, no, no. It was that was a very rich, uh, speech. Uh, you know, you're you're you're kind of tacking on, uh, you're you're a macro credential, uh, lens to, uh, stable coins and also combining that with a consumer protection uh, lens. All of that gets to the question of what frankly the larger ecosystem supporting stable coins will look like there being a regulatory ecosystem of what you're really uh ending on in that uh state federal um coordination and then you have the technology uh question and the other you know uh compliance actors who are supporting it and also the the frankly a lot of the regulatory requirements and maybe even encoding those requirements as you had mentioned uh onchain uh for permissibility and even financial risk uh management. Um is there in your view uh because there's so many things to be done a preferred maybe order of operations as to sort of how to get from where we are now postgenius to to the kind of financial system that that you would like to uh see evolve. >> Well, you know, there is unfortunately a bunch of complexity to the the governance under the act. So we don't have a single agency that can just write the rules for stable coins and that that's going to make things complicated. Um but I do think that you know starting with the basics that I outlined AML uh anti-moneyaundering lining and terrorist financing compliance making sure the reserve assets are really buttoned down um and then getting in place the capital and liquidity rules. Those are the key, you know, features of the system. And I think, you know, stable coin issuers that want to be successful in this market are going to want good rules for those things because it'll mean that the stable coins are stable. Uh, and that's that's sort of the key feature that you need for stable coins to be a money-like uh product. >> I'm a law professor. I can ask endless questions. So, I I'm I'm controlling myself. Does anyone have any questions? because if you don't, I'm going to ask a bunch of questions. Oh, yes, please. And then go to the back. >> Hi there. Um, Alex Feny from Stride. Um, I'm based in Hong Kong and I am building uh stablecoin infrastructure for banks and NBFIs so that these financial institutions can easily and compliantly accept regulated stable coins. Maybe a question for you governor is what should I be saying to the regulators and central banks with whom I interface who are wondering how to process stable coins locally. Right? So they have a lot of local financial institutions looking to them for guidance because a lot of these economies especially those close to Hong Kong are largely dependent on remittances. So they're now like very much like a deer in the headlights when it comes to this uh uh latest uh latest, you know, regulatory framework um with the Genius Act. >> Well, you know, I guess I would say like let's make sure we get the regulatory framework right for dollar denominated stable coins which dominate the market, you know, today. Um and once that framework is in place, if it's a trusted framework, if it's a strong framework, then you can rely on that framework for the issuance of those dollar denominated um coins. But it is going to require global coordination on regulation. Regulators have to be open to those conversations. They're happening around the world as you know. So uh that's what I would say. >> Thank you. and you can let identify yourself as well. >> Leam McFarland, thanks for your comments. I was wondering if you could speak to the potential impacts on the monetary supply and why that would be of increasing use of stable coins. >> Uh, thanks. So, I think for the United States, it's not likely to have a significant effect on how we think about monetary policy. It's just not a significant enough um change in how we think about um that there may be for for some small other countries where there might be large use of um dollar denominated stable coins. There are more interesting questions about about what I do. But it's it's for us it's not it's not really a monetary policy question. >> Hands. So like I'm the Oh, okay. my Oprah Winfrey. >> Thank you. Um, currently the >> identify yourself. >> Uh, my name is Bill. I work in the private sector. Um, currently the uh, [laughter] >> just want to get that out there. Um, currently the uh, stable coin uh, market cap is about $300 billion and Scott Ascent has been on the record for stating that he thinks that the stable coin market will probably tfold in the next two to three years. Do you um share that same sentiment as far as the growth of stable coins when it comes to growth in the future? >> Uh, thanks. So, first let me just say I I make a habit of not commenting on what other public officials say. So I I don't have any I don't have any comment on on the Treasury Secretar's um estimates and I I'll say I for myself I don't have a growth estimate for stable coins. I think uh a lot of it a lot of whether there will be significant growth in stable coins depends on whether it will be used outside of the current dominant use case of um crypto asset trading and for it to be used more broadly in the kind of ways that I was suggesting for crossber payments activities it would have to be seen as uh you know a a real strong stable um reliable able form of payment and for that to happen lots has to happen in the regulatory space for people to have that kind of confidence in the ways that I've outlined in my remarks. So I think there are there's just a lot of steps in that in that chain. >> You would have to be in the back row, right? >> Hi, Governor Bar. Uh Brendan Peterson with Punch Bowl News. Um I wanted to ask you in terms of the regulatory implementation things that need to be addressed in the Genius Act. Do you see areas uh gaps in the Genius Act that need to be amended or or uh introdu addressed by new legislation or things that the regulatory perimeter can't address on its own? >> Uh it's a good question. I I in my remarks I I didn't focus on the distinction between whether legislation would be useful and regulation would be useful. I I think we'll have to see what the framework the regulators come up with. I I outlined probably too many areas um but in detail the areas where I'm most concerned that regulators achieve a consensus on strong rules of the road so that they're um again so that stable coins can be successful. I think after we see the development of that regulatory framework it will be clear whether additional measures are needed or or not. >> Okay. So I'll make mine the last question because as I said we are trying to avoid traffic jams uh as the event goes on. Uh quick and that's told my time is up. Uh quick question [clears throat] experimentation in order to get this done there will be some experimentation. Uh experimentation has upsides and downsides for a regulator. It's really tough as I said yesterday you're going to get blamed when things go wrong. You'll never get credit when things go right. How do you actually manage experimentation given the there is no one uh single regulator uh and there will be some exploitation at the state level for sure and there's going to be some some some efforts at the federal level between the different agencies. How do you manage that uh productive way? >> Yeah, I I think it's going to be super challenging. I mean again you have the you have four um federal regulators and uh 50 plus um state regulators, state and territory regulators who potentially could develop different systems. The act um provides that uh state regulation should be substantially similar to federal reg regulation. So that there is a check on that process but it does really rely on consensus building. I I think if we see experimentation in regulation that is um not sufficient to provide the certainty that holders of stable coins need that their funds will be redeemable on demand and at par. Um that's going to create stress in the system. It won't be good for stable coin issuers. Stable some stable coin issuers might seek out those places. >> Um for short-term benefit, but in the long term that is not good for stable coin issuers as a whole. And so I do think it is incumbent on the issuers themselves to say to the states and to federal regulators, we don't want a weak regulatory system. We want one that people can rely on trust trust in a range of um stress conditions so that our use cases can be actually deployed. So, I do think it requires some uh self-interested foresight on the behalf of the stable coin issuing um sector to demand regulation that is strict. >> Well, with that, because we don't ever put anybody on the spot when Cory Eithan from Circle stands up afterwards for uh you know, >> we'll find out. >> Small stable coin issuer. will find out um uh right now. But uh as part two to this, but let's first of all thank Governor Bar for his time this this early morning. [applause] >> You want to stand? You want to sit? >> Yeah. Here, I'll pull this chair up. >> Thank you, Governor Bar. Thank you, Chris. Uh I'm Adam Minhard, head of policy at Chainlink Labs. I'm joined here with a longtime friend, great colleague, stable coin warrior, uh Corey Then with Circle. Uh we're going to talk a little bit about uh Corey's thoughts about uh the governor's remarks here. I think maybe we'll start off and uh get a sense of your initial reaction to his speech. >> Yeah, thanks Adam. just I'm assuming most people know Circle, but we're the largest uh regulated stable coin in the world. Uh have uh facilitated more than 40 trillion dollars of transactions now. A sort of like 12-year overnight success. Um we were um founded back in 2013. Um Governor Bar, first of all, uh I thank Governor Bar for uh his service more generally, but also his work on this. And I I thought his remarks were very interesting. For the most part, I agree with everything that he is saying. Um the way that I look at genius is um an old Church Hill quote. Uh this is not the end. It's not even the beginning of the end, but perhaps it's the end of the beginning. So there's a lot of work to be done in the rulemaking process. The last thing that we want at Circle is a permissive environment. Um uh we think that this the standards should be very strict uh in particular on reserving which is what I sort of think about as the essential element of a well-run stable coin that you need to be uh uh very short short duration uh no interest rate credit risk duration risk or as minimal as possible. And in many ways Genius is uh modeled on the way that we've operated the company for a long time. Our reserves are T- billills, uh, overnight reverse repos over collateralized by one and two-year treasuries. That's a mouthful. Um, and then of course, uh, uh, deposits at at global banks. So, I I I think that that's extremely important and putting some more um some finer points on that in the legislation is good uh or in regulation. I It's also interesting because I worked on this bill for more than three years. in its many iterations. We used to call it the McWaters bill. Uh we had a lot of input into it and you can read [clears throat] it many times and and hear something new um every time. I I I I hadn't thought much about Bitcoin being potentially a a permissible asset. Um I I'm not I'll have to go look at it again afterwards. Um but I think something like that is simply not fit for purpose. And let me and let me follow up on that point because I think that was an interesting uh idea that he raised at El Salvador could use uh Bitcoin reposially as permissible reserves. I think the idea of international harmonization is one we're all going to be following as the rules get pushed out. Uh Corey, I wanted to ask you your thoughts on on international harmonization and some of those ideas that the governor put out there. >> Yeah. Yeah. So that's the thing. Genius in our view is a consumer protection bill because you have to realize people are using stable coins one way or the other whether you like it or not and the growth is real and the use cases are real. So before this there was no framework in the United States and we would go around to um foreign jurisdictions talk you know with um you know I won't name names but like all the major jurisdictions that you would think of and they're saying hey what's the United States going to do? uh we see this use exploding and you know it's on the J curve but it you know we're we're sort of like dragging our feet waiting for the United States and many of them ended up going forward and making rules and now we can harmonize uh I've had many many conversations with uh just since Genius passed uh with global governments and and you know we're trying to play a role as a private sector company as an envoy here to make people understand genius uh and then uh figure out ways that we can work together so that um one the innovation doesn't stop at borders. Uh that would be a huge disservice to all of the use cases that I think governor bar very abley set out but also um uh it it's a consumer protection issue right and and we need to make sure that um in the event of a failure of a stable coin uh issuer that people are made whole. Now, one of the great things about the innovation is it's supposed to be onetoone. So, if you get if you put the right resources forward with the people, you spend the money, you go hire uh the the right staff, uh you have strict standards on the front end for AML, KYC, and the like, you should have a very safe institution. >> Um those are great points. Um I did want to touch on what the governor began his discussion with which is I think something most of us in crypto really talk about which is financial inclusion and remittances and get a sense from you uh what the reality is in your experience at circle seeing these crossber flows. >> Yeah. So remittances are $700 billion global flows every year. I mean some countries 40% of their GDP is remittances and this was always set out as like the first major use case for stable coins. We we've seen and and look, stable coins are used in crypto trading obviously, right? [snorts] But we see that as a bootstrap use case and the the uh percentage uh of use of USDC, our flagship stable coin, continues to increase with like real world activity and remittances is is you know, one of the primary areas. Um, we think that that's very I mean in the United States we have maybe six or seven% unbanked which is kind of sad frankly for a country as rich as us but in many countries that percentage is much much higher and and so now with with a uh a cell phone which many of them have access uh or greater access to that than a bank account people can be plugged into the global financial system in a way that they haven't been able to in the past. Um now on the other side we have the capital markets use cases. Um curious your views on that. That's something the governor really didn't touch on but I think there's increasing discussion about how these instruments are being used in capital markets. Could you go into a little detail about how you see stable coins in in that in that realm? >> Yeah. So for this one maybe it's not the end of the beginning. This it's just the beginning. Um, but it's one of the things that I'm most excited about, uh, because the the outpouring of institutional interest since Genius was passed is real. Um and if you think about uh how much foreign exchange moves around the world every year that's uh denominated in dollars. Um uh if you think about uh initial margin and variation margin and things like that and derivatives uh where collateral is constantly being posted. If you speed up the velocity of money and have instantaneous settlement, you can actually um increase economic well-being for a lot of people and also uh potentially take risk out of the system, right? I mean, that's one of the very interesting things about uh the technology is um and when you start tokenizing assets that is outside of stable coins, you need a money layer. But, you know, we're no longer like running stocks uh across the street in New York. Paper stocks. Eventually, we're going from T+1 to T+0. And stable coins can play a role in facilitating that as well. >> Yep. Yep. Um let me finish up with one question on kind of where we sit in the process for genius implementation. Uh we've seen some requests for comments from Treasury. Some deadlines have been pushed given the shutdown. I want to get a sense uh from you as to how you're viewing this implementation period both uh in the federal government but also with the states and the role they're going to play. >> Yeah. So I mean probably the hardest thing about Genius to get it done was um the state and federal debate. I mean the Hamilton and Jefferson debates are alive and well, you know, 250 years later. Um I think I think it hit a good balance, right? Um states the can serve as the laboratories of democracy. Uh you can go get a state license uh as an issuer and you know the the the state um regimes as Michael said need to be substantially similar. Um I think it will behoove the states to work with the federal government to sort of understand what that looks like. But then there's protections in the bill like above $10 billion the federal government has more oversight authority and and um some shared supervisory authority with the states. To me that looks uh a bit like you know the existing banking system. So uh I think the drafters did a very good job with a a tough political issue. >> Yep. Thank you for that. Um Chris has given me one mandate and that's to keep everything on time. So with that I'm going to wrap up. I want to thank Corey. Um, I'm going to give you a few programming notes here. We're going to take a 35minut break at this stage. Programming will be going on at other stages. Hot tip, the swag is on the fifth floor. Um, so for those looking uh to up their swag game, two bags and a t-shirt. Um, I know everyone's like, "No, I'm not into that." But you really are. So, fifth floor is where the swag is. Um, refreshments on five and refreshments on two. Again, really thank you, Corey. Uh great discussion. Thanks for having me.