European asset manager Amundi believes that the US GENIUS Act could trigger a surge in dollar-backed stablecoins, potentially causing unintended consequences for the global payment system, and even threatening the long-term dominance of the greenback itself.
“It could be genius, or it could be evil, said Vincent Mortier, Amundi’s chief investment officer, in a recent interview with Reuters.
While dollar-backed stablecoins have long been seen as a way to guarantee the dollar’s global hegemony, promoting a stablecoin could actually create “an alternative to the US dollar [...] that can could lead to more weakening of the dollar,” said Mortier.
His view is based on the GENIUS Act’s requirement that dollar-backed stablecoins must be fully collateralized with assets of equal or greater value. While this could boost demand for US Treasury bonds, it might also send the message that “the dollar is not that strong,” he warned.
Another unintended consequence, Mortier added, is that companies issuing stablecoins could become “quasi-banks” — a role they were never meant to play.
“It could potentially destabilize the global payments system,” he said.
Stablecoins, RWAs and the US GENIUS Act
Mortier’s comments came after the US Senate passed the GENIUS Act on June 17, moving it one step closer to becoming law. The legislation, which aims to regulate stablecoins by establishing reserve and capital requirements, now heads to the House of Representatives.
As Cointelegraph reported last month, the passage of the GENIUS Act could pave the way for companies to issue their own stablecoins, with Apple, Google and Elon Musk’s X reportedly exploring the possibility.
Treasury Secretary Scott Bessent has said that stablecoins could become a $3.7 trillion market by 2030.
In the meantime, stablecoins remain one of the fastest-growing segments of the crypto market, with their total value in circulation nearly doubling since the start of 2023 to surpass $250 billion. Analysts at JPMorgan expect the supply of stablecoins in circulation to double again over the next several years.
Stablecoins are considered a type of real-world asset (RWA) because they are backed by government bonds, fiat currencies and other tangible assets.
According to Abdul Rafay Gadit, a former Standard Chartered executive and founder of ZigChain, a digital currency exchange, the passage of the GENIUS Act could provide positive momentum not just for stablecoins but for RWAs and tokenization more broadly.
For the tokenization sector, the GENIUS Act “de-risks the use of digital dollars in tokenized ecosystems, making it far easier to build compliant RWA platforms with embedded onchain settlements. This is critical for sectors like real estate, trade finance, and sukuk issuance,” said Gadit.
Magazine: Bitcoin vs stablecoins showdown looms as GENIUS Act nears