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Stablecoins: A Revolutionary Payment Technology with Financial Risks

Author

Listed:
  • Rashad Ahmed
  • James A. Clouse
  • Fabio Natalucci
  • Alessandro Rebucci
  • Geyue Sun

Abstract

The GENIUS Act, recently signed into law, establishes a dual federal and state regulatory framework for stablecoins, effectively segmenting the USD stablecoin market into GENIUS-compliant stablecoins and those that are not. This paper discusses the use cases and potential benefits of stablecoins in terms of payment system efficiency and costs, as well as their substitutability with money market mutual funds and bank deposits. It then analyzes the financial stability risks associated with both GENIUS-compliant and unregulated stablecoins using empirical analysis and historical case studies. It concludes by discussing the economic implications of the emergence of a large dollar stablecoin ecosystem. The discussion is supported by a new survey of expert opinions canvassed through Large Language Model (LLM) analysis of all U.S. podcast episodes on stablecoins from January 20 to July 17, 2025.

Suggested Citation

  • Rashad Ahmed & James A. Clouse & Fabio Natalucci & Alessandro Rebucci & Geyue Sun, 2025. "Stablecoins: A Revolutionary Payment Technology with Financial Risks," NBER Working Papers 34475, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34475
    Note: AP CF EFG IFM ME PR
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    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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