Should Stablecoins Count as Real Money? The Federal Reserve Just Opened That Question — and It Could Rewrite How America Measures Its Money Supply

The Federal Reserve’s own researchers are now asking a question that would have sounded absurd five years ago: should stablecoins like USDC officially count as part of the American money supply?

By Maria Rodriguez | September 6, 2026

In a Federal Reserve study published September 4, researchers Kristen Payne and Mary-Frances Styczynski laid out a framework for deciding how stablecoins and other blockchain-based money products could eventually fit inside M1 and M2 — the official statistics the government uses to measure how much money exists in the economy and how liquid it is. For regular investors, this is not an academic exercise. If stablecoins get counted as money, they gain a kind of institutional legitimacy that could accelerate their use in everyday payments — and bring them one step closer to the heart of the financial system.

The Hook: The Fed Is Studying Stablecoins as Money, Not as Crypto

Here is the plain-English version. The Fed publishes three money-supply measures. The monetary base covers physical cash and bank reserves. M1 is money you can spend immediately — checking accounts and the like. M2 adds less liquid savings, such as small time deposits and retail money market funds. Think of M1 as the cash in your wallet and checking account, and M2 as that plus your savings account.

Payment stablecoins are not in either bucket today. But the researchers argue that could change, and the deciding factor is not the technology — it is how people actually use the tokens. A stablecoin used mainly for household purchases, business payments and instant transfers behaves like M1 money. A stablecoin held mostly to trade crypto or park value between transactions behaves more like the savings portion of M2.

The Evidence: Some Tokenized Money Is Already Counted

This is not a distant hypothetical. The study points out that two blockchain-based products already sit inside the monetary aggregates:

• Tokenized bank deposits — because legally they remain ordinary bank deposits, they already show up in M1 and M2.
• Retail tokenized money market funds — already included in M2 alongside traditional retail money market funds.

The researchers used USDC as the closest existing comparison for a payment stablecoin, while noting that few stablecoins currently operate under the GENIUS Act framework — the federal stablecoin law that also requires issuers to publish details about their reserve holdings. USDC is widely used as a settlement asset on-chain, but users also hold it between trades or place it in reward-bearing products — which is exactly the usage split that makes classification tricky.

There is precedent for definitions moving. In 2020, the Fed shifted savings deposits into M1 after regulatory changes made them more readily transferable. In other words: when the way people use money changes, the way the Fed counts money changes with it.

The Core Conflict: Counting the Same Dollar Twice

The biggest technical obstacle is double-counting. Every stablecoin in circulation is backed by reserve assets — bank deposits, Treasury bills, and other permitted liquid instruments. Bank deposits are already counted in M1 or M2, and retail government money market funds are already part of M2. If statisticians simply added the stablecoin on top of its own reserves, they would measure the same money twice and artificially inflate the money supply.

The size of that adjustment would depend on each issuer’s reserve mix, because Treasury bills are not part of M1 or M2 at all. Before any stablecoin could be included, regulators would need common reporting standards covering circulating supply, reserve composition, and even frozen or inaccessible tokens. The GENIUS Act disclosure requirements could supply part of that data, but the researchers note that implementation work — including outstanding regulatory proposals — remains unfinished.

Market Implications: Legitimacy Follows Measurement

Why should a regular investor care? Because in finance, what gets measured gets trusted. If the Fed’s statisticians formally track stablecoins inside the money supply, banks, treasurers and institutional investors gain a familiar frame for holding them: not as speculative crypto assets, but as a modern form of dollars. That supports the broader trend of stablecoins creeping into payments, remittances and tokenized markets — the same theme a recent Bank of Korea study touched when it found dollar stablecoin demand can weaken local currencies.

For context, bitcoin traded around 79,700 USD and ether near 2,482 USD at the time of this report’s price snapshot, with the stablecoin policy debate unfolding largely independent of daily price action.

The Verdict: A Signal, Not a Decision

The authors were careful to stress that the paper reflects their personal views — it is not a Fed policy decision, and there is no active deliberation over changing the monetary aggregates. But studies like this are how change starts. The 2020 redefinition of M1 began the same way. If stablecoin payments keep growing, the question shifts from “should they count?” to “how do we avoid counting them twice?” — and the Fed now has a framework ready for that day.

The cryptocurrency market remains highly volatile. This article is for informational purposes only and does not constitute financial advice.