Fed Chairman Hot Waller: Cryptocurrency Technology

Written by: Zhao Yuhe  

Source: The Wall Street Journal  

Ahead of the Jackson Hole Global Central Bank Annual Meeting, the cryptocurrency industry held a blockchain seminar in Jackson Hole, with senior officials from the Federal Reserve, the SEC, and Donald Trump's son in attendance. Christopher Waller, a Federal Reserve Governor appointed by U.S. President Donald Trump and one of the top candidates for the next Federal Reserve Chair, said in a speech at the event on Wednesday that he called for embracing the "technology-driven revolution" underway in artificial intelligence and stablecoins, arguing that it could boost U.S. economic growth.  

In his speech, Waller stated that digital asset innovation is "nothing to fear," and the payment system is undergoing a "technology-driven revolution." The latest advancements in computing power, data processing, and distributed networks are spawning a host of innovative payment services.  

"When thinking about smart contracts, tokenization, or distributed ledgers, there is nothing to be afraid of," he said.  

"The technology we have today may be new, but using innovative technology to build new payment services is not a novel concept."  

### Supporting Federal Reserve Collaboration with Industry in Payments  

Waller, appointed by Trump in 2020, has previously expressed support for applying certain technologies in decentralized finance (DeFi), believing they can complement traditional payment systems. For example, he noted that distributed ledger technology can record asset transfers more efficiently and quickly.  

In Wednesday's speech, Waller emphasized that the impact of DeFi in payments—including its role in risk mitigation—could yield positive results if the private sector collaborates with the Federal Reserve. He stated that both public and private sectors can embrace innovation within their respective roles.  

He added that some of the most groundbreaking innovations in recent years have been "stigmatized" due to their association with digital assets.  

"These are just technologies—why are they so bad? If they can enable more useful or interesting applications, we should study and adopt them."  

Media analysis suggests that cryptocurrency companies are weighing a critical strategic question: How much control to exert in digital currency circulation mechanisms, whether to build entirely new systems, rely on shared systems, or adopt a hybrid approach.  

In response, Waller noted that the evolution of payment systems has always been driven by technological progress, with most changes led by private-sector innovation, while the Federal Reserve supports key foundations—either as a system operator providing core infrastructure or guiding the industry in developing specific solutions such as payment standards.  

"This complementary relationship has fostered a safe and efficient U.S. payment system, which serves as the backbone of commercial activities at home and abroad. Therefore, the Federal Reserve must continue to embrace technological progress, modernize its services, and sustain support for private-sector innovation."  

### Federal Reserve Exploring Tokens and AI in Payments  

The Federal Reserve launched its long-awaited payment network, FedNow, in 2023, allowing eligible banks with Federal Reserve accounts to facilitate instant fund transfers. Prior to this, the U.S. had lagged somewhat behind other countries in promoting real-time payments.  

Waller stated that the Federal Reserve is researching a new wave of payment technology innovations, including tokenization, smart contracts, and the use of artificial intelligence in payments.  

"As a central bank, we may never go down this path, but there is no reason not to explore and see what happens," he said.  

Waller emphasized that understanding these trends is crucial for the Federal Reserve as an operator of payment systems. It not only helps the Fed better support private-sector firms using related infrastructure but also allows it to assess whether emerging technologies have the potential to improve its existing platforms and services.  

"In fact, I believe the Federal Reserve should further strengthen engagement with industry innovators, especially as traditional finance and the digital asset ecosystem become increasingly integrated. We are exploring ways to advance this work—stay tuned."  

The Wyoming Blockchain Summit was held three days before the Jackson Hole Global Central Bank Annual Meeting. Analysts noted that the summit marked the climax of what Goldman Sachs had earlier described as the "Summer of Stablecoins."  

Waller is the second senior Federal Reserve official this week to publicly praise the cryptocurrency industry. A day before Waller's speech, Federal Reserve Vice Chair for Supervision Michelle Bowman also said at the summit that banks and regulators should treat the industry better and praised the development of tokenization.  

As previously reported by Wall Street News, Bowman stated in her Tuesday speech that banks and regulators must embrace the benefits of new technologies such as AI and cryptocurrencies, or risk diminishing their role in the economy. Ideally, she said, regulators should allow these new use cases to "expand in ways that benefit the banking system."  

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