Amundi Warns GENIUS Act May Backfire on Dollar Dominance

Amundi, Europe's largest asset manager, has raised concerns about the potential impact of the recent surge in dollar-backed stablecoins, driven by the United States' GENIUS Act, on global finance and the U.S. dollar's dominance. The GENIUS Act, a key piece of legislation aimed at regulating stablecoins, has sparked worries in Europe due to its potential unintended consequences.

Vincent Mortier, Chief Investment Officer at Amundi, noted that while stablecoins have traditionally been viewed as tools to enhance the dollar's influence, they could instead evolve into competitors. The requirement for these tokens to be fully backed by U.S. assets, such as Treasuries, might inadvertently convey fragility rather than confidence. Mortier cautioned that this could backfire, potentially destabilizing the global payments infrastructure, especially if major tech companies like Apple or Musk’s X enter the stablecoin market without sufficient oversight.

The GENIUS Act, passed by the Senate in mid-June, establishes reserve and capital requirements for stablecoin issuers and is now awaiting House approval. If enacted, the law could open the door for corporate-backed digital dollars, potentially growing the stablecoin market to $3.7 trillion by the end of the decade. However, Mortier's concerns center on the potential for these issuers to function like banks without the necessary regulatory oversight, which could result in significant disruptions in global financial systems.

Despite these concerns, many in the crypto sector view the legislation as an opportunity. Stablecoins, already valued at over $250 billion, are among the fastest-growing digital assets, with the majority tied to the U.S. dollar. Analysts expect this figure to double in the near future. Supporters of the bill argue that it would provide a regulatory framework for real-world asset tokenization, potentially accelerating the development of compliant onchain financial products in areas such as real estate and trade finance.

The potential impact of the GENIUS Act on the global financial landscape is substantial. While some see it as a means to strengthen the dollar's position, others view it as a catalyst for digital disruption. The legislation's outcome will be closely watched by global markets, as it could either reinforce the dollar's dominance or lead to a shift towards alternative digital currencies. The concerns raised by Amundi highlight the need for careful consideration and robust regulatory frameworks to mitigate potential risks and ensure the stability of global financial systems.