Stablecoin Surge Sparks Global Financial Concerns

The GENIUS Act, recently passed by the U.S. Senate, seeks to regulate dollar-backed stablecoins, causing fears over financial stability. Amundi Asset Management raises alarms about potential global impacts as stablecoin circulation could double. Countries express concerns over monetary sovereignty amid growing stablecoin use.

Europe's largest asset manager is sounding the alarm as a surge in dollar-backed stablecoins may disrupt the global payment system following the U.S. Senate's recent passage of the GENIUS Act. The bill, expected to be ratified by President Donald Trump, proposes a framework for these cryptotokens, sparking concerns of widespread 'dollarization' in other economies.

Vincent Mortier, Chief Investment Officer at Amundi Asset Management, cautions that while the act could bolster U.S. Treasury bonds, it might simultaneously weaken the dollar. He underscores the potential for stablecoins to evolve into 'quasi-banks' and the risks they pose to financial stability if widely adopted.

With 98% of stablecoins tied to the dollar yet 80% of transactions occurring outside the U.S., European officials, including Italy's finance minister, warn of threats to monetary sovereignty. The Bank for International Settlements echoes these concerns, highlighting potential transparency issues and capital flight from emerging economies.

(With inputs from agencies.)