Two Federal Reserve researchers, Kristen Payne and Mary-Frances Styczynski, published a framework on September 4 detailing classification guidelines for integrating stablecoins and blockchain assets into US money supply statistics. The central bank has historically excluded crypto assets from both M1 and M2 categories.
This first formal study on stablecoin accounting mechanisms bases classification on real-world asset usage patterns. Stablecoins frequently used by the public as a medium of exchange for retail purchases, business payments, or instant transfers would fall under M1. Coins primarily held in wallets as a store of value between exchange trades would be classified under M2.
USDC as a Starting Point
The researchers used USDC as their closest reference point. The asset is widely used to settle on-chain transactions, but users also frequently leave balances dormant between trades. This dual nature makes USDC an ideal sample to test the boundaries between ready-to-use cash and a store of value.
A technical hurdle arises from the risk of double counting. The reserves backing stablecoins consist largely of bank deposits and Treasury bills (T-bills), which are already recorded in daily M1 or M2 systems. If the stablecoin supply were added directly to monetary aggregates, the Fed would need to make specific adjustments to prevent the total money supply from being counted twice.
Data tracking challenges extend to cross-border asset circulation. On-chain transactions operate purely without any jurisdictional footprint for senders or recipients. This makes it difficult for monetary authorities to isolate the portion of tokens actually circulating within the US economy.
Awaiting Reserve Transparency
Detailed data on reserve composition is strictly necessary before the classification system can be implemented. That information gap could potentially be bridged through the implementation of the GENIUS Act, federal legislation requiring stablecoin issuers to disclose the composition of their backing assets. However, the Office of the Comptroller of the Currency (OCC) has not yet finalized its rules, holding up institutional data collection.
The research paper includes a clarifying note that the draft framework solely reflects the personal views of Payne and Styczynski. Their publication is not part of central bank policy decisions and does not reflect any plans to change monetary aggregate figures in the near term.
Shifting the boundaries of money supply categories is a standard move for central banks. In 2020, the Fed moved savings deposits into M1 following regulatory changes. While the stablecoin accounting framework is laid out on paper, its implementation now awaits full regulatory certainty on issuer reserve disclosures.
Source: crypto.news.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
