A key US Federal Reserve governor is signalling open-mindedness about private sector innovations in the payments space, including DeFi breakthroughs, stablecoins and a role for artificial intelligence (AI).

Fed governor Christopher Waller confirms that the US reserve bank plans deeper engagement with fintech innovators and is conducting its own technical research into tokenisation and AI-enabled payments.

Speaking at the Wyoming Blockchain Symposium on 20th August, Waller acknowledged payments systems are undergoing a “technology-driven revolution” enhanced by computing power, data processing and distributed networks.

“This includes 24/7 instant payments, user-friendly digital wallets and mobile payment apps, and stablecoins and other digital assets,” Waller said during his speech in Teton Village, Wyoming. “Alongside these new services sits enabling technology, such as AI, that has the potential to improve the precision and efficiency of the underlying payment products even further.”

Waller cites the current “excitement and admittedly sometimes hype” surrounding the payments revolution. He also notices “some who have been fearful or sceptical of innovation in this space.”

Hence the need for regulation, Waller concedes. In July, President Donald Trump signed into law the so-called Genius Act, the nation’s first stablecoin law. The authors sought to strike a delicate balance between the need for guardrails while also establishing a platform for the US to maintain a leadership position in the space.

The Bank Policy Institute and state banking associations are already demanding amendments to prevent a rapid diversion of deposits. They cite a report finding that legalised stablecoin rewards programmes could draw as much as US$6.6trn out of the traditional banking system.

The day before Waller’s Wyoming speech, the Crypto Council for Innovation and Blockchain Association rebutted the call for partial repeal of the Genius Act. The crypto groups contend that the overwhelming majority of stablecoin reserves remain in commercial bank accounts or in treasuries, and Congress already studied the issue in depth before approving the bill.

“Stablecoins operate under rigorous reserve, operational and supervisory requirements, and their reserves largely remain in the traditional financial system, continuing to support liquidity and lending,” the crypto groups wrote.

Waller calls the Genius Act “an important step for the payment stablecoin market and could help stablecoins reach their full potential. … Like card payments, we see connections to the traditional payments, clearing and settlement ecosystem. For example, many stablecoin arrangements use legacy payment services to fund and redeem stablecoin balances.”

Waller, considered a leading contender to succeed Fed Chair Jerome Powell, anticipates more adoption of AI in payment practices. He envisions AI as “not serving as payments infrastructure but as an enabling technology that could bring considerable benefits” to private and public payment systems.

The American banking system already uses AI as a tool to detect bank fraud and money laundering and to predict payment flows. Waller predicts that Agentic AI systems “appear to be the next wave of AI advancement. While agentic AI is still in its early days, payments innovators in the private sector are once again channelling the promise of this technology and rapidly building out various use cases.”

The embrace of technological advancements will continue. To that end, the Fed is “conducting technical research on the latest wave of innovations, including tokenisation, smart contracts and AI in payments,” he says.

Waller promised the blockchain community gathered in Wyoming that the Fed will listen to their input.

“We engage with innovators like you to better understand new technologies and their potential to improve payments,” he emphasised. “In fact, it is my belief that the Federal Reserve could benefit from further engagement with innovators in industry, particularly as there is increased convergence between the traditional financial sector and the digital asset ecosystem.”