John C. Williams, the president of the Federal Reserve Bank of New York, said he is less worried about risks from stablecoins.

Williams, who has led the New York Fed since 2018, has previously emphasized stablecoins as potentially “very useful” for payments when paired with clear regulation. His latest remarks suggest that comfort level has only grown, likely buoyed by the regulatory infrastructure that’s taken shape over the past year.

The GENIUS Act changed the conversation

Williams’ reduced concern tracks directly with the passage of the GENIUS Act, which was signed into law in July 2025 and established the first comprehensive federal framework for payment stablecoins in the US.

The law requires payment stablecoins to maintain 1:1 backing with cash and short-term instruments. It also mandates non-interest-bearing reserves and tailored risk management strategies for issuers.

The market responded accordingly. Stablecoin market capitalization grew approximately 50% during 2025, driven by rising transaction volumes and deeper integration within decentralized finance ecosystems.

Not everyone at the Fed is singing the same tune

Williams’ optimism doesn’t represent a monolithic Fed view. Governor Michael Barr has raised concerns about the quality of reserve assets and liquidity risks that stablecoins still pose.

Barr’s worry centers on structural vulnerabilities, particularly the risk of runs. If stablecoin holders rush to redeem their tokens simultaneously, even well-reserved issuers could face liquidity crunches. The Fed’s own research has highlighted these complex intermediation challenges. The collapse of TerraUSD in 2022, which was an algorithmic stablecoin rather than a reserve-backed one, remains a cautionary tale about what happens when confidence evaporates faster than liquidity can respond.

What this means for the broader market

Williams didn’t name any specific stablecoin issuers or tokens in his remarks. The New York Fed executes monetary policy, supervises some of the largest financial institutions in the world, and holds a permanent voting seat on the Federal Open Market Committee.

The UK has been developing its own proposals for systemic stablecoin issuers, and discussions about cross-border regulatory alignment are ongoing.

The immediate market response to Williams’ comments has been muted, with no notable shifts in market sentiment. The risk for investors isn’t that stablecoins fail spectacularly. It’s that the regulatory environment shifts again, or that reserve quality proves weaker than assumed during a stress event. The GENIUS Act set a floor, but the ceiling depends on how well issuers comply and how rigorously regulators enforce the rules.