Amundi Warns GENIUS Act May Weaken Dollar, Destabilize Payments

Amundi, a leading European asset manager, has raised concerns about the potential unintended consequences of the US GENIUS Act, which aims to regulate stablecoins by establishing reserve and capital requirements. The act, passed by the US Senate on June 17, could lead to a surge in dollar-backed stablecoins, potentially destabilizing the global payment system and undermining the long-term dominance of the US dollar.

Vincent Mortier, Amundi’s chief investment officer, warned that while the GENIUS Act could boost demand for US Treasury bonds, it might also send a message that the dollar is not as strong as previously thought. This could create an alternative to the US dollar, leading to more weakening of the greenback. Additionally, companies issuing stablecoins could become "quasi-banks," a role they were never meant to play, further destabilizing the global payments system.

Mortier's comments come as the GENIUS Act moves closer to becoming law, with the legislation now heading to the House of Representatives. The act could pave the way for companies to issue their own stablecoins, with major tech firms reportedly exploring the possibility. Stablecoins, which are backed by government bonds, fiat currencies, and other tangible assets, have seen significant growth in recent years, with their total value in circulation nearly doubling since the start of 2023 to surpass $250 billion.

According to analysts, the passage of the GENIUS Act could provide positive momentum for stablecoins and real-world assets (RWAs) more broadly. The act could de-risk the use of digital dollars in tokenized ecosystems, making it easier to build compliant RWA platforms with embedded on-chain settlements. This could be critical for sectors like real estate, trade finance, and sukuk issuance. However, Amundi's warning highlights the potential risks associated with the GENIUS Act and the need for careful consideration of its implications on the financial system.