Payment stablecoins could eventually be counted inside M1 or M2, the two most-watched measures of US money supply, according to a Federal Reserve staff note published September 4, though the paper stops well short of policy and leaves the hardest accounting problems open.
The note, written by Fed researchers and published as staff analysis rather than a board decision, lays out how regulators would decide whether a payment stablecoin behaves like transaction money or like a savings balance. Everyday payment use would push a token toward M1, the narrowest official measure of money, which holds currency and balances that households and businesses can spend on demand. Short-term value storage would point toward M2, which adds less liquid products such as small time deposits and retail money market funds.
Today stablecoins sit outside the published aggregates entirely. The paper sketches what would have to change, and it is not a small list.
The double-counting problem
The central issue is that stablecoins are backed by reserve assets, and some of those reserves already appear elsewhere in the monetary aggregates. Adding gross circulation to M1 or M2 without adjustment would let the same dollar be counted twice, once as the token in a wallet and again as the Treasury bill or bank deposit backing it.
The authors propose adjustments before any net addition to the aggregates. They reference the reserve and reporting requirements from the GENIUS Act as the data foundation, noting that issuers must now disclose holdings in a way that makes overlap analysis possible. What the act did not settle is how the Fed would net out reserve assets already visible in other parts of the aggregates, and the note treats that as the main technical barrier.
Some tokenized money forms are already handled. Tokenized bank deposits legally remain conventional deposits, so they already sit inside existing measures without a double-count problem, because the underlying bank assets such as loans and securities generally sit outside the aggregates. Retail tokenized money market funds are likewise already included in M2 alongside their traditional equivalents. The researchers found vault cash is properly adjusted when the Fed calculates currency held by the public, so tokenized versions of deposit products inherit clean treatment rather than needing a new framework.
Geography is the gap
The harder problem is location. A token issued by a regulated US company can move between wallets anywhere in the world, and public blockchains show addresses and transactions but not a reliable holder location. A national money measure needs to separate US circulation from global circulation, and the note treats that separation as an open research question rather than a solved one.
The scale matters for context. Global stablecoin circulation is roughly $292 billion, with Circle reporting 71.8 billion USDC against $71.9 billion in reserves as of July 31. Seasonally adjusted US M2 stood at $23.2 trillion in July, per FRED data updated August 25. Stablecoins are about 1.3 percent of that, small enough that inclusion would not move the headline number much, but the precedent matters more than the size.
What it would mean if it happens
Inclusion in M1 or M2 would be a quiet but real form of official recognition. Money supply figures feed into economic analysis, monetary policy discussion, and how economists think about liquidity in the system. A stablecoin that counts as money gets treated differently by banks, auditors, and corporate treasurers than one that does not. Treasury market analysts also watch M2 for signals about where cash is parked, and billions of dollars sitting in tokens rather than bank deposits changes that picture in ways the current data cannot show.
Implementation also remains unfinished elsewhere. The OCC has proposed regulations covering reserves, redemptions, risk management and issuer supervision, but the final rule is not complete. Reporting on the delayed GENIUS Act rulemaking process has noted that agencies missed their initial deadlines for writing the detailed rules, leaving issuers operating under proposed rather than final requirements.
Any change requires data standards that do not exist yet and a formal Federal Reserve methodology decision. Until both happen, payment stablecoins stay outside the aggregates. The September 4 note offers an analytical path, not a policy. The authors state the views are their own and are not part of a Fed policy deliberation, which means no FOMC member has endorsed treating tokens as money.
Reading the timing
The note lands in the middle of a crowded regulatory season. The Senate faces a September 15 cloture vote on the CLARITY Act market structure bill, with several provisions still contested. G20 finance ministers endorsed clearer digital asset frameworks at their September 1 meeting in Asheville, though they held stablecoins out of that commitment pending a Financial Stability Board review with no fixed date. The ECB is weighing a second rate hike with euro inflation at 3.3 percent.
None of those directly touches the monetary aggregates, but together they describe a policy establishment working through, in public and in sequence, what it means for dollar-like instruments to live on blockchains. The Fed note is the most technical entry so far, and the least decisive. That is usually how these things start: a staff paper defines the questions, years pass, and one day the definition quietly changes.
For issuers, the practical takeaway is to keep building the reporting infrastructure the GENIUS Act requires. The note reads like a list of what the Fed would want to see from the data before it acts: transaction activity that shows economic use, reserve disclosures granular enough to net out overlap, and some defensible method for separating US from offshore circulation. Issuers who can produce those numbers when asked will be first in line if the methodology ever changes.
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