Fed Gov. Christopher Waller, one of seven on the central bank's board, says the crypto industry's effect on the dollar seems to actually be a help, so far.
As long as stablecoins are tied to the dollar – as 99% of those tokens are now – they're increasing the U.S. currency's global strength.

Crypto critics often warn of digital currencies' potential to destabilize the U.S. dollar, but Federal Reserve Gov. Christopher Waller argued that stablecoins' dependence on the dollar could actually strengthen the U.S. fiat currency as decentralized finance (DeFi) catches on.

"People often conjecture that cryptocurrencies like bitcoin may replace the U.S. dollar as the world's reserve currency," Waller said at an event Thursday in the Bahamas. But he noted that most DeFi trading uses stablecoins, and 99% of the market value of those tokens is tied to the value of the dollar. "So it is likely that any expansion of trading in the DeFi world will simply strengthen the dominant role of the dollar."

Waller, who was appointed to the board in 2020 by then-President Donald Trump, did acknowledge that a future in which people shifted from using dollars to using digital currencies could still be a monetary-policy danger. But he argued Thursday that the repeated rhetoric about the decline of the dollar as the global reserve currency is hollow.

"Recent developments that some have warned could threaten that status have, if anything, strengthened it, at least so far," he said.

The stablecoin sector – dominated by Tether (USDT) and Circle (USDC) – is at the center of crypto trading, acting as steady assets used to trade in and out of more volatile tokens. And some expect those utilitarian digital assets to balloon dramatically in the coming years, potentially into the trillions of dollars.

The strength of the dollar is vital to the U.S. economy and its foreign-policy interests, though that kind of government-based monetary dominance would be good to undermine, according to many crypto enthusiasts.

Regulations Federal Reserve Monetary Policy Dollar Stablecoins Christopher Waller DeFi

Jesse Hamilton

Jesse Hamilton is CoinDesk's deputy managing editor on the Global Policy and Regulation team, based in Washington, D.C. Before joining CoinDesk in 2022, he worked for more than a decade covering Wall Street regulation at Bloomberg News and Businessweek, writing about the early whisperings among federal agencies trying to decide what to do about crypto. He’s won several national honors in his reporting career, including from his time as a war correspondent in Iraq and as a police reporter for newspapers. Jesse is a graduate of Western Washington University, where he studied journalism and history. He has no crypto holdings.