For years, the debate surrounding stablecoins has been dominated by the mechanics of compliance and the looming threat of regulatory cliffs. However, a September 4, 2026, FEDS Note from Federal Reserve staff shifts the conversation from what issuers must do to what the central bank must measure. By establishing an analytical framework to evaluate these assets as potential components of M1 and M2, the Fed has signaled that it is beginning to treat them as a permanent fixture of the U.S. monetary landscape.
The H.6 statistical release is the second most downloaded dataset from the St. Louis Fed’s FRED database, serving as a primary pulse for the U.S. economy. By considering how to map stablecoins into this pulse, the Fed is acknowledging that the digital asset ecosystem has moved beyond the periphery of the financial system. This development aligns with research from the NY Fed, such as the work by Athreya on stablecoins as payment infrastructure and the associated risks of deposit flight.
The note, authored by Kristen Payne and Mary-Frances Styczynski, does not propose an immediate change to the H.6 release. Instead, it provides the conceptual basis for how the Fed might eventually incorporate stablecoins into its aggregates. The authors categorize stablecoins based on their primary function: if used as an everyday medium of exchange, they would align with M1; if held primarily as a store of value or for crypto trading, they would fall into non-M1 M2. This distinction is critical, as it mirrors the Fed’s historical approach to liquidity, such as the 2020 reclassification of savings deposits.
The central analytical hurdle identified by the staff is the risk of double-counting. Because stablecoins are typically backed by bank deposits, U.S. Treasury bills, or government money market funds, the underlying assets are already captured within existing M1 and M2 data. Simply adding the face value of stablecoins to the current $19.9 trillion M1 or $23.2 trillion M2 would inflate the money supply figures, creating a statistical mirage. Solving this requires a granular look at the composition of reserve assets, a task that remains complex given the current lack of separate tracking for tokenized deposits.
The framework also intersects with the GENIUS Act, specifically the Section 4(a)(11) prohibition on direct interest payments. As we explored in our analysis of the GENIUS Act yield ban, if stablecoins cannot pay interest, they function less like savings vehicles and more like demand deposits. This behavioral shift makes them more likely candidates for M1 classification, as they lose the yield-bearing characteristics that typically define non-M1 M2 components.
The timing of this research is not coincidental. With the GENIUS Act enforcement date set for January 18, 2027, and OCC Comptroller Jonathan Gould committed to finalizing rules by November 2026, the regulatory environment is rapidly hardening. While the compliance cliff—the subject of intense industry focus—concerns the legality of issuance, this Fed framework concerns the reality of circulation. The Fed is building the measurement infrastructure for the same assets that Wall Street is building settlement infrastructure for, as documented in our coverage of the institutional pivot.
“The emergence of blockchain-based money-like assets highlights the need for ongoing evaluation of monetary aggregate definitions,” the authors write. “The Federal Reserve should continue monitoring these developments and be prepared to update data collection systems, revise aggregate definitions as the digital asset landscape matures, and collaborate with other federal regulators to standardize data reporting requirements.” That is not a policy commitment. But it is the first time Fed staff have put that sentence in writing. The framework is the signal.