European asset management company Amundi believes that the U.S. GENIUS Act could trigger a surge in dollar-backed stablecoins, potentially leading to unexpected consequences for the global payment system and even threatening the long-term dominance of the dollar itself.
"That could be a stroke of genius or it could be evil," Amundi's Chief Investment Officer Vincent Mortier said in a recent interview with Reuters.
While dollar-backed stablecoins have long been seen as a way to guarantee the global hegemony of the dollar, the promotion of stablecoins could actually create "alternatives to the dollar […] which could lead to further weakening of the dollar," Mortier said.
His perspective is based on the GENIUS Act's requirement that dollar-backed stablecoins must be fully collateralized by assets of equal or greater value. While this could increase demand for U.S. Treasury bonds, it could also convey the message that "the dollar is not as strong," he warned.
Mortier added that another unexpected consequence could be that companies issuing stablecoins might become "quasi-banks"—a role they never intended to play.
"This could undermine the stability of the global payment system," he said.
Mortier's comments came after the U.S. Senate passed the GENIUS Act on June 17, bringing it one step closer to becoming law. This legislation, aimed at regulating stablecoins by establishing reserve and capital requirements, is now submitted 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 reports that Apple, Google, and Musk's X are exploring this possibility.
Treasury Secretary Scott Bessent stated that stablecoins could become a $3.7 trillion market by 2030.
Meanwhile, stablecoins remain one of the fastest-growing segments of the cryptocurrency market, with their total circulating value nearly doubling since the beginning of 2023, surpassing $250 billion. Analysts at JPMorgan expect the supply of circulating stablecoins to double again in the coming years.
Stablecoins are considered a form 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 Bank executive and founder of the digital currency exchange ZigChain, the passage of the GENIUS Act could not only provide a positive impetus for stablecoins but also more broadly promote the development of RWAs and tokenization.
For the tokenization sector, the GENIUS Act "reduces the risks of using digital dollars in the tokenization ecosystem, making it easier to build compliant RWA platforms with embedded on-chain settlement. This is crucial for industries such as real estate, trade finance, and Islamic bond issuance," Gadit said.
Related: Global exchanges compete for "on-chain U.S. stocks" access, crypto platforms are reshaping investment boundaries.
Original article: “Amundi warns GENIUS Act could backfire, undermining dollar dominance”
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