By CoinAINews Staff

September 7, 2026

The Federal Reserve is taking a closer look at how newer forms of digital money fit into the way the United States measures its money supply.

In a new FEDS Note published September 4, Federal Reserve researchers Kristen Payne and Mary-Frances Styczynski examined tokenized bank deposits, tokenized money market funds and payment stablecoins through the lens of the U.S. monetary aggregates.

The key distinction is straightforward: tokenized deposits and tokenized money market funds are already captured in existing monetary statistics, while payment stablecoins are currently outside those aggregates. The researchers explain that stablecoins could potentially fit into the monetary aggregates depending on how they are used and whether reliable data becomes available.

That does not mean the Federal Reserve has decided that stablecoins should immediately be added to M1 or M2. The paper is an analytical framework for considering the issue.

What Did the Federal Reserve Researchers Find?

Why Is the Fed Looking at Stablecoins?

The traditional definition of money is not limited to physical cash. The Federal Reserve researchers describe money as safe assets with relatively stable values that households and businesses can use for payments or hold as short-term investments.

That definition creates an interesting question for digital assets.

Payment stablecoins are designed to maintain a stable value, generally relative to a reference currency such as the U.S. dollar. They can also be transferred digitally, including for peer-to-peer payments and other transactions.

As a result, stablecoins can have some of the same economic characteristics that make traditional financial assets relevant to monetary aggregates.

The researchers therefore examine whether the existing statistical framework remains appropriate as financial technology changes.

M1 and M2: Why the Classification Matters

The U.S. monetary aggregates organize money according to liquidity and economic function.

M1 focuses on the most liquid forms of money that can be used readily for transactions. M2 includes M1 plus certain less-liquid assets that can serve as stores of value, including small-denomination time deposits and retail money market funds.

The Fed researchers point out that an asset's treatment can depend on whether it primarily functions as a medium of exchange or a store of value.

This distinction becomes particularly important for stablecoins because their economic role could change as their use expands.

Tokenized Bank Deposits Are Already Being Counted

One of the more important findings is that tokenization does not automatically create a completely new category of money.

A tokenized bank deposit is essentially a digital representation of a traditional bank deposit on a blockchain or distributed ledger. The underlying deposit remains a bank liability and stays on the bank's balance sheet.

Because banks already report these deposits through existing regulatory reporting systems, the tokenized form does not currently need to be separated from traditional deposits for the purpose of measuring the money supply.

Depending on the characteristics of the underlying deposit, it can therefore already be reflected in M1 or the non-M1 portion of M2.

Tokenized Money Market Funds Are Also Already Captured

The same basic principle applies to tokenized money market funds.

A tokenized money market fund represents ownership of fund shares using blockchain-based infrastructure. The underlying fund can still hold the same types of short-term, relatively low-risk assets as a conventional money market fund.

The researchers note that tokenized money market fund shares are currently captured within the existing retail money market fund component of non-M1 M2.

However, their classification could become more complicated if tokenized fund shares begin to function primarily as payment instruments rather than investment or savings products.

In that scenario, the economic function of the asset could become more relevant to how it should be measured.

Why Payment Stablecoins Are Different

Payment stablecoins present a different statistical challenge.

Unlike tokenized deposits, stablecoins are not simply digital representations of conventional bank deposits. Their reserves can include assets such as U.S. Treasury bills and bank deposits, depending on the structure and regulatory requirements governing the issuer.

The Fed researchers specifically examine payment stablecoins authorized under the U.S. regulatory framework and note that these assets are currently not included in the monetary aggregates.

That creates a potential measurement gap if stablecoins become widely used for payments or as short-term stores of value.

At the same time, adding stablecoins to monetary statistics is not as simple as counting the number of tokens in circulation.

The Biggest Problem May Be Data

One of the most important issues identified by the researchers is data availability.

To incorporate stablecoins into official monetary statistics, policymakers would need reliable and timely information about how many tokens are actually circulating and how they are being used.

There is another complication: double counting.

If a stablecoin is backed by assets that are already included somewhere in the monetary aggregates, simply adding the stablecoin's full value could overstate the amount of money in the economy.

The researchers therefore highlight the need for better standardized reporting and careful treatment of the assets backing stablecoins.

Recent U.S. regulation could eventually improve the data available to policymakers. The researchers point to reporting requirements for payment stablecoin issuers, including information about reserve holdings.

Could Stablecoins Become Part of M1?

Potentially, but there is no automatic answer.

If payment stablecoins become widely used as a medium of exchange, their economic characteristics could make an M1 classification relevant.

If they are primarily held as a store of value, a different treatment could be appropriate.

The important point is that classification should reflect how the asset actually functions in the economy rather than simply how the technology behind it works.

This is one reason the Fed researchers' framework is more nuanced than the headline that "stablecoins should be added to M1."

This Is Not a Fed Decision to Add Stablecoins to M1 or M2

That distinction matters.

The September 4 FEDS Note is a research publication examining new forms of money and the U.S. monetary aggregates. It does not announce a Federal Reserve decision to change the official definitions of M1 or M2.

Instead, the researchers discuss how tokenized deposits, tokenized money funds and payment stablecoins could be evaluated within the existing framework.

For crypto investors, that means the report should be viewed as an important signal about the growing economic relevance of stablecoins—not as confirmation that the Fed is about to officially add stablecoins to the money supply.

Why This Matters for the Crypto Industry

The significance goes beyond a technical debate over economic statistics.

Stablecoins have increasingly moved from being primarily crypto-trading infrastructure toward a broader role in payments, settlement and dollar-based digital finance.

Federal Reserve researchers have also examined stablecoins in other recent research. A May 2026 FEDS Note discussed how stablecoins could increasingly compete with traditional transaction accounts, while another Fed analysis examined their potential financial-stability implications.

If stablecoins become a meaningful part of everyday payments, policymakers will need reliable ways to measure their economic footprint.

That could eventually affect how economists interpret money growth, liquidity and the relationship between digital payment instruments and traditional bank deposits.

Could Stablecoins Change How the Money Supply Is Measured?

Possibly, but the process is likely to depend on adoption and data quality.

The U.S. monetary system has historically evolved as new financial products became important enough to require changes in measurement. Digital assets introduce another layer of complexity because the same underlying economic value can potentially be represented through different technological structures.

The Fed researchers' analysis suggests that the challenge is not simply deciding whether stablecoins are "money."

The harder questions are:

• How are stablecoins actually being used?
• How much of the supply is actively circulating?
• How much is being held as a store of value?
• What assets back the stablecoins?
• Are those backing assets already included in monetary statistics?
• Can policymakers obtain reliable and timely circulation data?

Those questions will become increasingly important if stablecoin adoption continues to expand.

What Happens Next?

For now, there is no announced change to the official U.S. monetary aggregates based solely on this research note.

The more immediate development to watch is the quality of stablecoin reporting and the scale at which these tokens are used outside crypto trading.

If stablecoins become widely used for everyday payments, corporate transactions or other financial activity, the case for systematically measuring them could become stronger.

At that point, policymakers may have enough data to determine whether a stablecoin category should be incorporated into existing monetary aggregates or whether another statistical approach would be more appropriate.

Frequently Asked Questions

Are tokenized bank deposits already included in U.S. money supply data?

Yes. The Federal Reserve researchers say tokenized bank deposits are already captured through existing bank reporting because they remain bank deposits and liabilities of the banking system.

Are tokenized money market funds included in M2?

Yes. Tokenized money market fund shares are currently captured within the existing retail money market fund component of non-M1 M2, according to the Fed researchers.

Are payment stablecoins currently included in M1 or M2?

No. The researchers say payment stablecoins are currently not included in the U.S. monetary aggregates.

Does the Fed want to add stablecoins to M1?

The research note does not announce such a policy decision. It examines how stablecoins could potentially be classified depending on whether they function primarily as a medium of exchange or a store of value.

Why is stablecoin measurement difficult?

A major challenge is obtaining reliable circulation data while avoiding double counting of assets that already appear elsewhere in the monetary statistics.

Why does this matter for crypto investors?

It shows that stablecoins are increasingly being analyzed as part of the broader financial and monetary system rather than solely as crypto-market infrastructure.

Bottom Line

The Federal Reserve's latest research highlights a growing gap between traditional monetary statistics and the way digital financial instruments are evolving.

Tokenized bank deposits and tokenized money market funds are already captured within existing U.S. monetary aggregates. Payment stablecoins are different: they currently sit outside M1 and M2 even though they can perform money-like functions.

The Fed researchers are not announcing that stablecoins will be added to the money supply. Instead, they are laying out the economic and data questions that would have to be addressed if stablecoins become important enough to require formal inclusion.

For the crypto industry, that distinction is important. The debate has moved beyond whether stablecoins are simply a crypto product. Increasingly, the question is how their growing role in payments and finance should be measured within the wider U.S. economy.

Sources

• Federal Reserve — New Forms of Money and the U.S. Monetary Aggregates
• Federal Reserve — Banks in the Age of Stablecoins
• Federal Reserve — Stablecoins in 2025