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Europe’s largest asset manager, Amundi, warns that the US GENIUS Act may inadvertently weaken the US dollar and disrupt the global payments landscape through a surge in dollar-backed stablecoins.
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The legislation’s requirement for full collateralization of stablecoins could paradoxically signal diminished confidence in the dollar, while potentially transforming stablecoin issuers into quasi-banks.
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Vincent Mortier, Amundi’s chief investment officer, cautions that while the GENIUS Act aims to regulate stablecoins, it might destabilize the global payment system and challenge the greenback’s long-term dominance.
Amundi highlights risks in the US GENIUS Act, suggesting stablecoin regulation could weaken the dollar and disrupt global payments amid rising stablecoin adoption.
Implications of the US GENIUS Act on Stablecoins and the Dollar’s Global Role
The recent passage of the US GENIUS Act by the Senate marks a pivotal moment in stablecoin regulation, introducing stringent reserve and capital requirements designed to enhance transparency and stability. However, Amundi’s chief investment officer, Vincent Mortier, emphasizes that these regulations could have unintended consequences. The mandate that dollar-backed stablecoins be fully collateralized with assets of equal or greater value, primarily US Treasury bonds, might inadvertently convey a message of diminished dollar strength. This perception could encourage the development of alternative payment systems that bypass traditional dollar reliance, potentially eroding the greenback’s global hegemony.
Moreover, the GENIUS Act’s framework could elevate stablecoin issuers to quasi-banking entities, a role they were not originally intended to fulfill. This shift raises concerns about systemic risks and regulatory complexities, as these companies might assume responsibilities akin to traditional financial institutions without equivalent oversight. Mortier warns that such developments could destabilize the global payments infrastructure, which currently depends heavily on the dollar’s stability and trust.
Stablecoins as Real-World Assets and the Tokenization Opportunity
Stablecoins, predominantly pegged to the US dollar, are increasingly recognized as a form of real-world asset (RWA) due to their backing by tangible reserves such as government bonds and fiat currencies. The GENIUS Act’s regulatory clarity is expected to catalyze growth not only in stablecoins but also in the broader tokenization ecosystem. Abdul Rafay Gadit, founder of ZigChain and former Standard Chartered executive, notes that the legislation “de-risks the use of digital dollars in tokenized ecosystems,” facilitating the development of compliant platforms with embedded on-chain settlements.
This regulatory environment is particularly promising for sectors like real estate, trade finance, and sukuk issuance, where tokenization can enhance liquidity, transparency, and efficiency. As stablecoins approach a market valuation exceeding $250 billion and continue to grow rapidly, the GENIUS Act could serve as a foundational framework that supports the integration of RWAs into mainstream financial markets.
Market Outlook and Industry Responses to the GENIUS Act
The stablecoin market is poised for significant expansion, with Treasury Secretary Scott Bessent projecting a potential market size of $3.7 trillion by 2030. Major technology companies such as Apple, Google, and Elon Musk’s X are reportedly exploring stablecoin issuance, signaling growing institutional interest. Analysts at JPMorgan anticipate that the supply of stablecoins could double in the coming years, underscoring the importance of robust regulatory frameworks.
Industry experts remain divided on the GENIUS Act’s impact. While some view it as a necessary step to foster trust and compliance, others, like Mortier, caution against possible destabilization effects. The Bank for International Settlements (BIS) has also expressed skepticism, highlighting stablecoins’ shortcomings as money and advocating for strict limits on their role within the financial system.
Conclusion
The US GENIUS Act represents a critical juncture in the evolution of stablecoin regulation, aiming to balance innovation with financial stability. However, as Amundi’s insights reveal, the legislation carries complex implications that could challenge the US dollar’s supremacy and reshape the global payments ecosystem. Stakeholders should closely monitor the Act’s progression through the House of Representatives and its subsequent implementation, as its outcomes will significantly influence the future trajectory of stablecoins, tokenization, and international finance.
