European asset supervisor Amundi believes that the US GENIUS Act may set off a surge in dollar-backed stablecoins, probably inflicting unintended penalties for the worldwide cost system, and even threatening the long-term dominance of the buck itself.
“It might be genius, or it might be evil, mentioned Vincent Mortier, Amundi’s chief funding officer, in a current interview with Reuters.
Whereas dollar-backed stablecoins have lengthy been seen as a method to assure the greenback’s international hegemony, selling a stablecoin may truly create “a substitute for the US greenback […] that may may result in extra weakening of the greenback,” mentioned Mortier.
His view is predicated on the GENIUS Act’s requirement that dollar-backed stablecoins have to be absolutely collateralized with belongings of equal or higher worth. Whereas this might increase demand for US Treasury bonds, it may additionally ship the message that “the greenback shouldn’t be that sturdy,” he warned.
One other unintended consequence, Mortier added, is that corporations issuing stablecoins may grow to be “quasi-banks” — a task they have been by no means meant to play.
“It may probably destabilize the worldwide funds system,” he mentioned.
Associated: BIS says stablecoins fail as cash, requires strict limits on their function
Stablecoins, RWAs and the US GENIUS Act
Mortier’s feedback got here after the US Senate handed the GENIUS Act on June 17, shifting it one step nearer to turning into regulation. The laws, which goals to control stablecoins by establishing reserve and capital necessities, now heads to the Home of Representatives.
As Cointelegraph reported final month, the passage of the GENIUS Act may pave the best way for corporations to problem their very own stablecoins, with Apple, Google and Elon Musk’s X reportedly exploring the chance.
Treasury Secretary Scott Bessent has mentioned that stablecoins may grow to be a $3.7 trillion market by 2030.
Within the meantime, stablecoins stay one of many fastest-growing segments of the crypto market, with their complete worth in circulation practically doubling because the begin of 2023 to surpass $250 billion. Analysts at JPMorgan anticipate the availability of stablecoins in circulation to double once more over the following a number of years.
Stablecoins are thought of a sort of real-world asset (RWA) as a result of they’re backed by authorities bonds, fiat currencies and different tangible belongings.
In accordance with Abdul Rafay Gadit, a former Normal Chartered govt and founding father of ZigChain, a digital forex alternate, the passage of the GENIUS Act may present constructive momentum not only for stablecoins however for RWAs and tokenization extra broadly.
For the tokenization sector, the GENIUS Act “de-risks the usage of digital {dollars} in tokenized ecosystems, making it far simpler to construct compliant RWA platforms with embedded onchain settlements. That is crucial for sectors like actual property, commerce finance, and sukuk issuance,” mentioned Gadit.
Journal: Bitcoin vs stablecoins showdown looms as GENIUS Act nears
