Federal Reserve researchers published a framework on Sept. 4, 2026, for deciding whether payment stablecoins and other tokenized money-like assets should be counted in U.S. monetary aggregates such as M1 and M2.
- Function matters most: payment use leans toward M1, short-term value storage toward M2.
- Tokenized deposits are the easy case: they remain bank liabilities and already fit existing money stats.
- Stablecoins are harder: reporting, reserve double-counting, and global circulation complicate measurement.
- This is research, not policy: the Fed has not changed how it publishes M1 or M2.
The Federal Reserve is not handing stablecoins a trophy here. It is doing something far more bureaucratic, and far more consequential: asking how on earth to measure them properly.
In a research note titled New Forms of Money and the U.S. Monetary Aggregates, Kristen Payne and Mary-Frances Styczynski laid out a framework for classifying payment stablecoins, tokenized deposits, and tokenized money market funds. Their basic premise is refreshingly plain: the label on an asset matters less than what it actually does in the economy.
That may sound dry, but it is the kind of dry that moves markets, policy, and the plumbing beneath both. Monetary aggregates are the Fed’s way of tracking how much money exists in different forms. They are still used to gauge liquidity and spending power, even if they no longer dominate financial headlines the way they once did.
What the Fed researchers are trying to solve
The Federal Reserve publishes three main money measures: the monetary base, M1, and M2. M1 is the narrow, highly liquid bucket, money you can spend on demand. M2 is broader and includes M1 plus less liquid savings products such as small time deposits and retail money market funds.
The research note asks a simple question with messy consequences: if digital dollars are now widely used for payments, transfers, and short-term storage, should official money statistics count them?
The answer, at least in this framework, depends on use. If a digital asset functions mainly as a payment instrument, it starts to look like M1. If it behaves more like a short-term store of value, it points toward non-M1 M2.
That is the core of the paper. Not branding. Not hype. Not whatever a project’s website says in 48-point font.
Tokenized deposits are the cleanest comparison
The easiest category to classify is tokenized bank deposits. These remain legally conventional bank deposits, even if they are transferred on blockchain-based infrastructure instead of through older payment rails.
That legal reality matters. A tokenized checking deposit still belongs in M1. A tokenized small time deposit belongs in the non-M1 portion of M2. Banks already report tokenized deposits through the same regulatory forms used for traditional deposits, and the researchers found no additional double-counting problem for them.
In plain English: if it is still a bank deposit, the accounting is relatively straightforward. The wrapper changed. The liability did not.
Stablecoins are the tricky part
Payment stablecoins are not as easy to slot into the existing framework because they can serve several different jobs at once. They may be used for payments, trading liquidity, short-term parking for cash, or cross-border transfers. That makes them statistical shape-shifters.
The researchers used USDC as the closest existing comparison. That makes sense: it is one of the most familiar dollar-backed stablecoins and gives the framework a real-world anchor instead of a theoretical one.
Under the note’s logic, a stablecoin used mainly for everyday payments would lean toward M1. A stablecoin used mainly as a short-term store of value would lean toward M2. The point is not what the token is called. The point is how people actually use it.
That is also where the accounting gets awkward. Stablecoin reserves can include bank deposits, Treasury bills, and other permitted liquid instruments. If those backing assets are already captured somewhere in the financial system, statisticians have to avoid counting the same value twice. That is the double-counting problem, and it is not a small one.
Public blockchains make the issue even messier. Stablecoins can circulate globally, while U.S. monetary aggregates are meant to measure U.S. money. A token can move across borders instantly, but a blockchain does not politely tag its holders with a home address. Good luck building clean national statistics out of that without some serious reporting rules.
Why the GENIUS Act and OCC rules matter
The research note points to the GENIUS Act and proposed Office of the Comptroller of the Currency rules as part of the infrastructure that could eventually make stablecoin measurement possible. The GENIUS Act’s disclosure requirements may help provide some of the data needed to track reserves and issuance more accurately.
The OCC’s proposed regulations cover reserves, redemptions, risk management, and issuer supervision. But they are still proposed rules, not a final rule. That distinction matters. Crypto policy loves to declare victory while the paperwork is still in the mail.
None of this means the Fed has decided to count stablecoins. It means the reporting and supervision environment may improve enough that official statisticians could, in time, make a more serious attempt.
The real obstacle is measurement, not ideology
The Fed researchers are not making a philosophical argument about whether stablecoins are “real money.” They are making a measurement argument.
Any attempt to include stablecoins in official money supply figures has to deal with four practical problems:
- Data availability, issuers need to provide reliable information.
- Reporting structure, the data must be consistent enough to use.
- Double-counting, reserve assets cannot be counted twice.
- Geographic scope, U.S. statistics have to separate domestic activity from global circulation.
That last point is especially important. A stablecoin can be held by someone in the United States, Europe, Latin America, or anywhere else with an internet connection and a wallet app. Counting only domestic usage is easy to say and hard to verify.
The note says the latest H.6 release continues to measure money based on liquidity and economic use. That is the old framework still doing the job it was designed to do, just under much more digital pressure.
Why tokenized money market funds already fit into M2
The note also covers tokenized money market funds. These are blockchain-based representations of shares in regulated money market funds, and the researchers treat them the same way as their traditional counterparts.
That means they remain in M2. Why? Because they are still fund shares, not spendable bank deposits, and converting them into cash usually takes one or two business days.
That delay is the key difference. Money market fund shares are liquid, but they are not cash-on-demand money in the same sense as deposits or physical currency. They are closer to a short-term store of value than a pure payment instrument.
What this does not mean
This research does not set a timetable for adding stablecoins to M1 or M2. It does not rewrite Fed methodology. It does not mean payment stablecoins are suddenly part of the published U.S. monetary aggregates.
Until the Fed formally changes how it measures money, payment stablecoins remain outside the official M1 and M2 figures.
That may annoy the usual crypto crowd who think every useful token should be instantly blessed by the establishment. But the Fed’s job is not to hype innovation. It is to count carefully, and to avoid making a mess of the numbers.
Why this matters beyond the spreadsheets
The bigger signal is that digital money is no longer a side issue. If Federal Reserve researchers are mapping stablecoins against M1 and M2, that means these assets have moved from niche crypto plumbing into macroeconomic relevance.
That does not make stablecoins perfect money. They still carry issuer risk, reserve transparency issues, regulatory fragmentation, and plenty of overpromised nonsense from people who mistake a whitepaper for gravity. Some stablecoins are genuinely useful. Some are just faster ways to move risk around.
But it also does not mean the old monetary categories are untouchable. If people increasingly use stablecoins as digital dollars for payments, settlement, and short-term storage, the statisticians will eventually have to decide whether the money supply has grown new on-chain limbs.
For Bitcoiners, there is a useful lesson here. Money is not standing still because one protocol is hard money and another is not. The financial system is already building new rails, new liabilities, and new wrappers around value. Some of that will be garbage. Some of it will be genuinely useful. That is how innovation works when nobody asks permission first.
The Fed has not endorsed stablecoins. It has done something more modest and more important: it has shown how they might be measured if they become too important to ignore.
Key questions and takeaways
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Could stablecoins end up in M1 or M2?
Possibly. The Fed researchers say classification should depend on how they are used, with payment behavior pointing toward M1 and short-term storage of value pointing toward M2. -
Are stablecoins in official U.S. money supply stats today?
No. Until the Fed formally changes its methodology, payment stablecoins remain outside the published M1 and M2 figures. -
Why are tokenized deposits easier to classify?
Because they remain bank liabilities and are already reported through existing banking data systems. The accounting stays inside the banking perimeter. -
What is the biggest problem with counting stablecoins?
Measurement. Regulators need reliable reporting, a way to avoid double-counting reserve assets, and a method for separating U.S. usage from global circulation. -
Why are tokenized money market funds treated differently?
They are still fund shares, not bank deposits, and redemptions usually take one or two business days. That makes them fit M2 rather than M1. -
Does this mean the Fed is endorsing stablecoins?
No. This is a statistical framework, not a policy blessing. The Fed is trying to measure digital money more accurately, not crown it king.
Further reading
A few related pieces for the policy, plumbing, and political angles behind digital money.
- Tokenized Deposits and Their Impact on Bank Liquidity and
- An Update to Measuring the U.S. Monetary Aggregates
- Building the Trust Layer for Global Money Movement
- Deutsche Bank Explores Stablecoins and Tokenized Deposits
- Trump’s Bold Moves: Using Stablecoins and Cheap Oil to
- Fed Governor Backs Bank-Issued Stablecoins, Calls for
