Fed Governor Miran: Stablecoin Growth Could Lower U.S. Interest Rates by 40 Basis Points

This analysis is based on the CNBC report [1] published on November 7, 2025, covering Fed Governor Stephen Miran’s speech at the BCVC Summit 2025 in New York, where he suggested that stablecoin growth could significantly impact U.S. monetary policy [1][3].

Fed Governor Stephen Miran’s thesis centers on how dollar-denominated stablecoins affect the supply-demand balance for loanable funds. Under the GENIUS Act, U.S.-domiciled stablecoin issuers must maintain 1:1 reserves in safe, liquid dollar assets, creating substantial demand for U.S. Treasury bills and other dollar-denominated liquid assets [3]. Research cited by Miran suggests this mechanism could generate 40 basis points of downward pressure on interest rates through widespread stablecoin adoption [3].

The current stablecoin market provides critical context: total market cap has reached $314 billion (record high as of late 2025) [7], growing from $200 billion at the start of 2025 to $280 billion by Q3 [6]. Projections indicate potential expansion to $1.9 trillion (base case) to $4.0 trillion (aggressive) by 2030 [6]. USDC maintains 28% market share with $61.3 billion in circulation [6], while Tether dominates with 68% market control [6].

The speech occurred during regular trading hours on November 7, 2025, with markets showing modest positive reaction:

• S&P 500 (^GSPC): +0.49% to 6,729.02 [0]
• NASDAQ (^IXIC): +0.49% to 23,006.12 [0]
• Dow Jones (^DJI): +0.18% to 46,880.80 [0]
• 10-Year Treasury Yield (^TNX): 4.09% (unchanged) [0]

The measured equity response suggests investors were processing longer-term implications rather than immediate policy changes.

Miran’s analysis draws parallels to the “global saving glut” era (1996-2004) [3], suggesting that stablecoins could create a similar downward pressure on the neutral rate (r*). An additional $2 trillion of foreign demand would increase the current account deficit by approximately 1.2% of GDP - about 30% of the original global saving glut impact [3].

However, this structural shift carries significant implications:

• Zero Lower Bound Risk
  : Lower r* increases odds of hitting the ZLB, limiting Fed accommodation ability [3]
• Exchange Rate Impact
  : Dollar flows into stablecoins could strengthen the dollar [3]
• Global Synchronization
  : Greater dollarization increases business cycle synchronization [3]

The GENIUS Act provides regulatory clarity that may accelerate institutional adoption [3], but implementation timelines and international coordination remain uncertain. The market’s concentration risk, with Tether controlling 68% of the stablecoin market [6], creates potential single-point failure concerns that could affect the stability of the Treasury demand mechanism.

1. Regulatory Implementation Risk
   : The GENIUS Act’s effectiveness depends on implementation quality and international coordination. Differing approaches across jurisdictions could fragment the global stablecoin market.

2. Market Concentration Risk
   : Tether’s dominant 68% market share creates systemic risk concerns [6]. Any issues with major issuers could disrupt the Treasury demand mechanism.

3. Banking System Disruption
   : Potential for accelerated deposit migration from traditional banks to stablecoin platforms could impact financial intermediation.

4. Adoption Uncertainty
   : Stablecoin growth may not reach projected levels due to yield limitations and competition from central bank digital currencies (CBDCs) [3].

The analysis reveals several potential opportunities:

• Institutional Integration
  : Growing institutional adoption and integration with traditional finance [6][7]
• Policy Effectiveness
  : Regulatory clarity from GENIUS Act providing institutional confidence [3]
• Market Development
  : Current trajectory suggests continued growth toward multitrillion-dollar scale

Miran noted he expects to leave the Fed in January 2026 when his unexpired term ends [1], potentially affecting policy continuity. The full impact on monetary policy is likely to materialize over several years, with the most significant effects potentially emerging in the 2026-2030 timeframe as projected adoption levels are reached.

• Current Market
  : Stablecoin market cap at $314 billion record high [7], with projections of $1.9-4.0 trillion by 2030 [6]
• Policy Impact
  : Research suggests 40 basis points downward pressure on interest rates [3]
• Regulatory Framework
  : GENIUS Act requires 1:1 reserves in safe, liquid dollar assets [3]
• Market Structure
  : Tether controls 68% of market, USDC 28% [6]
• Historical Parallel
  : Impact represents ~30% of original “global saving glut” effect [3]

: Stablecoin reserve composition, foreign vs. domestic adoption patterns, banking system deposit trends, regulatory developments, and Treasury market reactions to increased stablecoin demand [0][3][6].