Fed is studying tokenization, smart contracts, and AI in payments, says Governor Waller

The Federal Reserve is studying cutting-edge innovations, including tokenization, smart contracts, and artificial intelligence, to see how their payment systems might benefit from these technologies, Fed Governor Christopher Waller said today at the Wyoming Blockchain Symposium 2025.

“As a payment system operator, it is important to understand trends in payments technology so that we can continue to support private sector firms that leverage our infrastructures, as well as understand whether emerging technologies could provide opportunities to improve our existing platforms and services,” Waller stated.

Waller noted that bank regulators are collaborating with industry leaders to learn about emerging technologies as well as assess how they could improve payments. He emphasized the importance of collaboration with innovators, especially as the traditional financial sector overlaps more with digital assets and crypto.

On stablecoins, Waller said they could enhance the dollar’s international role and improve retail and cross-border transactions. The enactment of the GENIUS Act, the landmark legislation that sets the legal standards for stablecoin issuance in the US, is a key development in the payment stablecoin market, he stated.

“This was an important step for the payment stablecoin market and could help stablecoins reach their full potential,” he noted.

As far as AI tech is concerned, Waller said the payments sector has been utilizing machine learning for fraud detection, money laundering prevention, and payment trend prediction since 1990. A number of developments in large language models and generative AI have further improved fraud detection and payment reconciliation.

“The payment system is experiencing what I have called a ‘technology-driven revolution,’ where the latest advances in computing power, data processing, and distributed networks have fueled growth in innovative new payment services,” Waller said.