BWC Chair William C. Dudley, who led BWC’s work on stablecoins, has published new research on the topic with Nellie Liang. Building on the recently passed GENIUS Act, the authors examine how regulators can ensure that payment stablecoins become a safe, trusted payment instrument rather than a source of financial instability.

Their analysis highlights several key issues for policymakers, including whether stablecoin issuers should be allowed to pay interest, how to maintain a reliable 1:1 redeemable value, how to prevent illicit finance, and how to address operational risks such as fraud and cyber threats. The authors recommend strong prudential standards, enhanced AML safeguards, and clear operational resilience requirements to ensure stablecoins support innovation while preserving financial stability.