The Federal Reserve Board of Governors reiterated a friendly stance towards Decentralized Finance, advocating for private sector-led payment innovation.

Source: cryptoslate

Compiled by: Blockchain Knight

Federal Reserve Governor Christopher Waller stated that DeFi should not be considered "terrible" just because it operates outside of traditional banking infrastructure.

At the 2025 Wyoming blockchain conference, Waller defined blockchain-based transactions as "a natural technological evolution" rather than "a disruptive threat."

He compared DeFi operations to traditional shopping, pointing out that "buying cryptocurrencies with stablecoins through smart contracts" is completely consistent with the basic process of "shopping with a debit card at a grocery store."

Waller stated: "There is nothing to fear in using smart contracts, tokenization, or distributed ledgers in daily transactions."

This Federal Reserve official positioned DeFi technology as "a new tool for transferring assets and recording transactions," emphasizing its functionality is highly similar to existing payment methods.

Waller argues that innovation led by the private sector should be the core driving force behind the development of payment systems, and views stablecoins as "the latest example of market-driven solutions."

In addition, he believes that the development of stablecoins has expanded the use of the US dollar globally, especially in countries with high inflation and a lack of inclusive financial services, where its role is even more significant.

Waller even emphasized that stablecoins possess the characteristics of "24-hour uninterrupted service" and "fast transfers," which not only have the potential to "maintain and expand the international status of the US dollar," but also improve the efficiency of retail payments and cross-border payments.

The speech comes after the passage of the "GENIUS Act," which is the first core cryptocurrency legislation signed into effect in the United States. Waller referred to it as "an important step for the payment stablecoin market."

Waller's statement in Wyoming is a continuation of his stance of "supporting innovation" for the entire year of 2024.

In October last year, at a macroeconomic seminar in Vienna, Waller pointed out that DeFi is more likely to "complement traditional finance" rather than "completely replace traditional finance."

He recognizes the potential of DeFi in "simplifying financial activities," while also emphasizing that financial intermediaries still play an important role for most people.

In November 2024, at the annual meeting of the Bill Exchange, Waller advocated for market-driven solutions in the cryptocurrency and payment sectors, emphasizing the advantages of the private sector in driving innovation through competition.

He believes that profit motives and market competition can enable private enterprises to make better choices in technology investment decisions and consumer demand assessment.

Waller also mentioned that the Federal Reserve is conducting technical research on tokenization, smart contracts, and artificial intelligence in the payment sector. This initiative not only helps the Federal Reserve fulfill its role as a payment system operator but also provides private enterprises with the opportunity to leverage central bank infrastructure.

Waller stated that payment systems are undergoing a "technology-driven revolution" driven by advancements in computing power, data processing, and distributed networks.