Fed explores surprising new tech to transform payments

Fed explores surprising new tech to transform payments originally appeared on TheStreet.

The Federal Reserve is conducting technical research on the latest innovations, including tokenization, smart contracts, and artificial intelligence (AI) in payments, Governor Christopher Waller said on Aug. 20.

Waller revealed the details while delivering a speech on "Technological Advancements in Payments" during the Wyoming Blockchain Symposium in Teton Village.

Tokenization refers to the process of using blockchain technology to digitally represent real-world assets (RWAs) as tradable tokens and offer fractional ownership of those tokens to prospective investors.

Smart contracts are the technology underlying the crypto ecosystem.

Waller said it's crucial to understand the latest trends in payments technology in order to support private firms that leverage the Fed's infrastructures and to appreciate emerging technologies as tools to improve the central bank's existing platforms and services.

The payments system is experiencing a "technology-driven revolution" that has ushered in the usage of 24/7 instant payments, digital wallets and apps, stablecoins and other digital assets, and AI, Waller underlined. He also added there is nothing "scary" about crypto just because transactions take place in the decentralized finance (DeFi) world.

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Waller also discussed the emergence of stablecoins in great detail. Calling them "the latest example of private sector-led innovation in payments," he emphasized how their use case as a means of accessing the U.S. dollar in countries with high inflation could potentially extend the role of the USD globally.

Waller calls GENIUS Act 'an important step'

Notably, President Donald Trump signed the GENIUS Act into law on July 14. The first major crypto law in the U.S., it regulated stablecoins pegged to the USD. Waller called it "an important step" that could help stablecoins reach their full potential.

Governor Waller also appreciated the use of AI to detect fraud and money laundering and predict payment flows and trends. He said it's his belief that the Fed could benefit from further engagement with industry innovators amid the greater convergence between the traditional finance and crypto ecosystems.

"We are working on ways to further that engagement, so stay tuned," he added.

Fed explores surprising new tech to transform payments first appeared on TheStreet on Aug 20, 2025

This story was originally reported by TheStreet on Aug 20, 2025, where it first appeared.

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