GENIUS Act May Spark 98% Dollar-Backed Stablecoin Surge, Reshape Global Finance

The GENIUS Act, recently adopted by the US Senate, is set to regulate dollar-backed stablecoins, potentially reshaping the global financial landscape. This legislation, if approved by the House of Representatives and signed into law, could lead to a significant surge in demand for these cryptocurrencies. Vincent Mortier, Chief Investment Officer at Amundi, Europe’s leading asset manager, has expressed concerns about the potential destabilizing effects of this law. He warns that the GENIUS Act could lead to a massive purchase of US Treasury bonds, thereby strengthening global dependence on the dollar and potentially triggering a new era of digital monetary warfare.

According to Mortier, the GENIUS Act could have profound implications for the global financial system. The law could induce a shift in international capital flows, with a potential move towards global digital dollarization. This shift could be driven by the fact that 98% of stablecoins currently in circulation are backed by the dollar, reinforcing the centrality of the greenback in the ecosystem. However, more than 80% of stablecoin transactions take place outside the United States, indicating a largely global usage. This could lead to a situation where stablecoins, becoming de facto “quasi-banks”, capture deposits from individuals and companies outside traditional circuits, disintermediating banking systems and weakening central banks, especially in emerging economies.

Amundi's concerns are not isolated. Several European financial authorities share similar fears. Last April, Italy’s Finance Minister stated that the US policy on stablecoins constituted “a threat even more dangerous to European financial stability than the trade war led by Trump”. The Bank for International Settlements (BIS) also highlighted risks of insufficient transparency, capital flight, and loss of control over monetary policies. According to Mortier, this massive adoption could even “be perceived as an implicit message that the dollar is no longer so strong”, suggesting a symbolic erosion of the greenback’s authority as its usage becomes dematerialized through private proxies.

The future of the global monetary system could thus be partly played out on the field of crypto regulation. If the GENIUS Act establishes itself as a major milestone in the American strategy of digital financial domination, European reactions show that a confrontation is looming. The law could lead to a profound reconfiguration of international capital flows, with a potential shift toward global digital dollarization. This could have significant implications for monetary sovereignty, particularly outside the United States, and could lead to a new era of digital monetary warfare.