The Federal Reserve is actively examining stablecoins and their potential impact on traditional banking practices. Michelle Bowman, Vice Chair for Supervision at the Fed, emphasized the need for regulation during her speech at a Madrid conference hosted by Santander International Banking in November 2025. Bowman highlighted how stablecoin regulations could affect deposit strategies and market stability. The GENIUS Act, addressing stablecoin interest mechanisms, adds new regulatory challenges and poses risks of deposit outflows into these products. This shift may impact credit availability for banks. As the Fed explores regulation, the cryptocurrency market anticipates changes in liquidity. The banking sector is also adapting to maintain a competitive edge in the digital asset space. Bowman believes, ‘It’s crucial that we work toward a level playing field for banks and nonbanks to engage with digital assets, particularly stablecoins, so innovation can flourish while managing risk.’