US Dollar May Weaken as Stablecoin Regulations Reshape Global Finance
US Dollar May Weaken as Stablecoin Regulations Reshape Global Finance

US Dollar May Weaken as Stablecoin Regulations Reshape Global Finance

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Diverging Reports Breakdown

China’s JD.com and Ant Group Push for Yuan Stablecoins

There is currently a stablecoin market $238 billion globally. China is optimistic to break the American hold of the U.S. dollar in the market. The move signals China’s intent to dominate the digital finance space. If successful, the yuan-based stablecoins could reshape the global finance system. The action may shift world financial power. The Hong Kong digital asset rules present a perfect platform. Infrastructure issues, like liquidity rails, are still a concern. The lack of retail adoption of the digital RMB remains another obstacle.

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China’s JD.com and Ant Group Push for Yuan Stablecoins

Ant Group and JD.com are advancing the lobbying of stablecoins that are pegged to yuan. This is an effort that is meant to counter the increasing stablecoin market. There is currently a stablecoin market $238 billion globally. The Chinese technology companies are optimistic of subduing this power of the U.S dollar. They want to issue stablecoins that are pegged to the Chinese yuan.

China’s Stablecoin Plan and Global Implications

The stablecoins operating on the basis of yuan will most likely be permissioned. They shall be very compliant to KYC (Know Your Customer) regulations. Such rules fit into tough controls on digital finance in China. The new framework of Hong Kong will provide the issuance of the stablecoins. This framework becomes operative on August1, 2025. The Hong Kong digital asset rules present a perfect platform.

The principal purpose is to increase the yuan internationalization. This move will see more people use the yuan. China is optimistic to break the American hold of the U.S. dollar in the market. Even though the adoption of digital RMB (Renminbi) is still low, the stablecoins have a potential to alter the situation. Based on the statistics of BeInCrypto, as of 2022, the digital RMB is used by 20 percent of the population. But stablecoins based on yuan will only broaden its influence in international finance.

The objective of this approach of China is also to weaken the hold of the U.S. dollar. Cross-border transactions have normally been performed using stablecoins. The market is dominated by U.S-backed stablecoins. China aims at decreasing the dependence on dollar-pegged stablecoins. The action may shift world financial power.

Challenges and the Road Ahead

China faces many challenges in rolling out these stablecoins. Infrastructure issues, like liquidity rails, are still a concern. The country will need to address these challenges before the stablecoins can succeed. Additionally, other hurdles include global regulatory scrutiny. The lack of retail adoption of the digital RMB remains another obstacle. These issues may limit the stablecoin’s impact in the short term.

However, the move signals China’s intent to dominate the digital finance space. If successful, the yuan-based stablecoins could reshape the global finance system. It would reduce U.S. dollar dependency and support the yuan’s global rise.

Source: Coinfomania.com | View original article

Amundi Warns GENIUS Act May Undermine Dollar Dominance

Amundi, the largest asset manager in Europe, has sounded the alarm over the GENIUS Act. The Act is aimed at bringing clarity and regulation to the burgeoning world of stablecoins. These cryptocurrencies are designed to maintain a stable value, typically pegged to a fiat currency like the U.S. dollar. Amundi’s concern is that the Act could inadvertently chip away at this dominance. If the Act inadvertently creates an environment where non-dollar-pegged stable-coins gain traction as international settlement, it could fragment the global financial landscape. A decrease in dollar-denominated cross-border transactions could impact the global payment web. A lack of regulation could lead to systemic risks if a major stablecoin collapses, triggering a ripple effect across financial markets. It could also create a parallel financial system that, paradoxically, could compete with traditional dollar-based banking, or at least shift significant financial activity outside the direct purview of established dollar rails in a way that is less integrated than intended.

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The financial world is abuzz with a new urgent warning that could reshape the landscape of international finance. Amundi, the largest asset manager in Europe, has sounded the alarm, suggesting that a seemingly innocuous piece of U.S. legislation – the GENIUS Act – might inadvertently undermine the long-standing supremacy of the U.S. dollar and destabilize the intricate web of global payments.

The GENIUS Act, an acronym for the “Generating Innovative New Ideas for the United States Act,” is a legislative effort aimed at bringing clarity and regulation to the burgeoning world of digital assets, specifically stablecoins. These cryptocurrencies are designed to maintain a stable value, typically pegged to a fiat currency like the U.S. dollar, or to a basket of assets. They play a crucial role in the broader crypto ecosystem, acting as a bridge between volatile cryptocurrencies and traditional finance.

The bill, which recently cleared the Senate and is now making its way to the House of Representatives, seeks to impose stringent requirements on stablecoin issuers. These requirements include full collateralization, mandating that stablecoins be fully backed by reserves, ensuring that each digital coin is supported by an equivalent value in real-world assets. Additionally, the bill establishes specific capital reserves that issuers must hold, akin to traditional financial institutions, to absorb potential losses. It also brings stablecoin issuers under the purview of established financial regulators, ensuring compliance with anti-money laundering (AML) and know-your-customer (KYC) protocols.

On the surface, these measures appear to be a sensible step towards fostering trust and mitigating risks in the rapidly evolving digital asset space. However, as Amundi’s Chief Investment Officer Vincent Mortier articulated, the devil lies in the details and the potential unintended consequences.

For decades, the U.S. dollar has reigned supreme as the world’s primary reserve currency and the bedrock of international trade and finance. This “dollar dominance” provides the U.S. with significant economic and geopolitical leverage. It allows the U.S. to borrow more cheaply, gives its financial markets unparalleled depth, and ensures that a vast majority of global transactions are settled in dollars.

Amundi’s concern is that the GENIUS Act’s approach to stablecoins could inadvertently chip away at this dominance. By heavily promoting and regulating fully collateralized stablecoins, the U.S. might be sending an unintended signal: a lack of confidence in the inherent stability of the dollar itself. If the U.S. feels the need to create a “super-regulated” digital dollar alternative, it could imply that the existing dollar isn’t sufficient for the digital age, potentially prompting other nations to explore their own alternatives.

Furthermore, Mortier warned that transforming stablecoin issuers into “quasi-banks” through rigorous reserve and capital requirements could have a profound impact. While ensuring stability, it might also create a parallel financial system that, paradoxically, could compete with traditional dollar-based banking, or at least shift significant financial activity outside the direct purview of established dollar rails in a way that is less integrated than intended.

The rise of stablecoins has been one of the most significant developments in the cryptocurrency space. They offer the speed and efficiency of digital assets while mitigating the notorious volatility of cryptocurrencies like Bitcoin. This makes them ideal for various applications, from facilitating crypto trading to enabling faster, cheaper cross-border payments. The demand for clear regulation stems from several high-profile stablecoin failures, which highlighted the risks associated with inadequate backing and transparency.

However, the challenge lies in striking the right balance. Overly burdensome regulation, as some fear the GENIUS Act might impose, could stifle innovation and drive stablecoin development offshore. Conversely, a lack of regulation could lead to systemic risks if a major stablecoin collapses, triggering a ripple effect across financial markets. The “quasi-bank” designation is particularly contentious because it implies a level of responsibility and regulatory burden that many stablecoin issuers are not currently equipped for, potentially concentrating power among a few large entities that can meet these demands.

The implications for global payments are substantial. Currently, a significant portion of international trade and remittances flows through dollar-denominated channels. If the GENIUS Act inadvertently creates an environment where non-dollar-pegged stablecoins or other digital currencies gain traction as alternatives for international settlement, it could fragment the global payment landscape. Imagine a scenario where nations might accelerate the development of their own central bank digital currencies (CBDCs) or promote stablecoins pegged to their own currencies, reducing reliance on the dollar. A decrease in dollar-denominated cross-border transactions could impact the U.S.’s ability to exert influence through financial sanctions or to monitor global financial flows. Businesses and financial institutions would need to navigate a more complex web of digital currencies and regulatory frameworks, potentially increasing costs and inefficiencies.

Amundi’s concern isn’t just about a slow erosion but a potential “disruption” to existing payment systems, which could lead to inefficiencies and instability in the short to medium term.

The ultimate fear articulated by Amundi is the potential for the GENIUS Act to “destabilize global financial stability.” This goes beyond mere inconvenience in payments. Financial stability refers to the resilience of a financial system to absorb shocks and maintain its essential functions. If the U.S. dollar’s role as the primary global reserve currency is significantly challenged, it could trigger a cascade of effects: increased volatility in exchange rates as countries diversify their reserves away from the dollar, a decline in demand for U.S. Treasury bonds, potentially increasing U.S. borrowing costs, the emergence of new, highly regulated stablecoin entities that might be “too big to fail” but operate outside the traditional banking system, creating new vectors for systemic risk, and a weakening of U.S. financial influence could lead to shifts in geopolitical power dynamics, with other currencies or digital assets gaining prominence.

The delicate balance between fostering innovation in digital assets and safeguarding the existing financial order is a tightrope walk for policymakers. While regulation is necessary to protect consumers and prevent illicit activities, over-regulation or ill-conceived frameworks could inadvertently weaken the very system they aim to protect.

As the GENIUS Act moves to the House, the debate will undoubtedly intensify. Lawmakers will need to carefully weigh the benefits of a robust, regulated stablecoin market against the potential risks to dollar dominance and global financial stability. The implications are far-reaching, touching upon national security, economic prosperity, and international relations.

The Amundi warning serves as a critical reminder that legislative actions, even those with good intentions, can have complex and unforeseen consequences in an interconnected global economy. The future of dollar dominance and the evolution of global payments hinges on these crucial policy decisions.

Source: Ainvest.com | View original article

Amundi Warns GENIUS Act May Weaken Dollar, Disrupt Payments

Amundi, Europe’s largest asset manager, has expressed concerns that the US GENIUS Act could inadvertently weaken the US dollar and disrupt the global payments landscape. The legislation, which aims to regulate stablecoins, introduces stringent reserve and capital requirements designed to enhance transparency and stability. The mandate for full collateralization of dollar-backed stablecoins with assets of equal or greater value, primarily US Treasury bonds, might signal diminished confidence in the dollar. This perception could encourage the development of alternative payment systems that bypass traditional dollar reliance. The stablecoin market is poised for significant expansion, with Treasury Secretary Scott Bessent projecting a potential market size of $3.7 trillion by 2030.

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Amundi, Europe’s largest asset manager, has expressed concerns that the US GENIUS Act could inadvertently weaken the US dollar and disrupt the global payments landscape. The legislation, which aims to regulate stablecoins, introduces stringent reserve and capital requirements designed to enhance transparency and stability. However, Amundi’s chief investment officer, Vincent Mortier, warns that these regulations could have unintended consequences.

The mandate for full collateralization of dollar-backed stablecoins with assets of equal or greater value, primarily US Treasury bonds, might signal diminished confidence in the dollar. This perception could encourage the development of alternative payment systems that bypass traditional dollar reliance, potentially eroding the greenback’s global hegemony. Mortier emphasizes that while the GENIUS Act aims to regulate stablecoins, it might destabilize the global payment system and challenge the greenback’s long-term dominance.

Moreover, the GENIUS Act’s framework could elevate stablecoin issuers to quasi-banking entities, a role they were not originally intended to fulfill. This shift raises concerns about systemic risks and regulatory complexities, as these companies might assume responsibilities akin to traditional financial institutions without equivalent oversight. Mortier warns that such developments could destabilize the global payments infrastructure, which currently depends heavily on the dollar’s stability and trust.

Stablecoins, predominantly pegged to the US dollar, are increasingly recognized as a form of real-world asset (RWA) due to their backing by tangible reserves such as government bonds and fiat currencies. The GENIUS Act’s regulatory clarity is expected to catalyze growth not only in stablecoins but also in the broader tokenization ecosystem. This regulatory environment is particularly promising for sectors like real estate, trade finance, and sukuk issuance, where tokenization can enhance liquidity, transparency, and efficiency.

As stablecoins approach a market valuation exceeding $250 billion and continue to grow rapidly, the GENIUS Act could serve as a foundational framework that supports the integration of RWAs into mainstream financial markets. The stablecoin market is poised for significant expansion, with Treasury Secretary Scott Bessent projecting a potential market size of $3.7 trillion by 2030. Major technology companies such as Apple, Google, and Elon Musk’s X are reportedly exploring stablecoin issuance, signaling growing institutional interest.

Industry experts remain divided on the GENIUS Act’s impact. While some view it as a necessary step to foster trust and compliance, others, like Mortier, caution against possible destabilization effects. The Bank for International Settlements (BIS) has also expressed skepticism, highlighting stablecoins’ shortcomings as money and advocating for strict limits on their role within the financial system.

The US GENIUS Act represents a critical juncture in the evolution of stablecoin regulation, aiming to balance innovation with financial stability. However, as Amundi’s insights reveal, the legislation carries complex implications that could challenge the US dollar’s supremacy and reshape the global payments ecosystem. Stakeholders should closely monitor the Act’s progression through the House of Representatives and its subsequent implementation, as its outcomes will significantly influence the future trajectory of stablecoins, tokenization, and international finance.

Source: Ainvest.com | View original article

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. Vincent Mortier, Chief Investment Officer at Amundi, has expressed concerns about the potential destabilizing effects of this law. He warns that the 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. The law could induce a shift in international capital flows, with a potential move towards global digital dollarization.

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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.

Source: Ainvest.com | View original article

Amundi Warns GENIUS Act May Undermine Dollar’s Global Dominance

Amundi has expressed concerns about the potential consequences of the GENIUS Act, a bill recently passed by the Senate aimed at regulating stablecoins. The firm warns that while the act seeks to bring stability and oversight to the rapidly growing market of dollar-backed digital currencies, it could inadvertently undermine the U.S. dollar’s global dominance and disrupt the international payment system. Amundi’s warning comes at a time when stablecoins are gaining traction as a means of facilitating cross-border transactions and providing a stable store of value in volatile markets. The bill’s requirement for full collateralization may drive more investment into US Treasury bonds.

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Amundi, a prominent European asset management firm, has expressed concerns about the potential consequences of the GENIUS Act, a bill recently passed by the Senate aimed at regulating stablecoins. The firm warns that while the act seeks to bring stability and oversight to the rapidly growing market of dollar-backed digital currencies, it could inadvertently undermine the U.S. dollar’s global dominance and disrupt the international payment system.

The GENIUS Act, which stands for “Guaranteeing Economic Stability and Oversight of Stablecoins,” aims to establish a regulatory framework for stablecoins, ensuring they are backed by sufficient reserves and subject to stringent oversight. However, Amundi’s analysis suggests that the act’s provisions could have unintended repercussions. The firm’s concerns center around the potential for the act to destabilize the global payment system, which has long relied on the U.S. dollar as a stable and trusted medium of exchange.

Amundi’s warning comes at a time when stablecoins are gaining traction as a means of facilitating cross-border transactions and providing a stable store of value in volatile markets. The firm emphasizes that overly permissive stablecoin policies, particularly those that allow for interest-bearing features, could exacerbate the risks to the global financial system. Amundi suggests that such policies could lead to a proliferation of stablecoins that are not adequately backed by reserves, potentially causing a loss of confidence in these digital assets and, by extension, the U.S. dollar.

Amundi noted that stablecoin issuers could operate like banks, blurring the lines between tech firms and traditional financial institutions. This development could disrupt the financial system by drawing deposits away from traditional banks and into stablecoin platforms, potentially destabilizing the global payment system.

The act’s requirement for full collateralization may drive more investment into US Treasury bonds. This could increase bond demand while signaling that the dollar needs support. That perception may impact investor confidence in the dollar’s strength. While supporting digital finance, the act could also add strain to the global financial order.

Proponents believe the act offers clarity for tokenized finance. It helps create a compliant environment for platforms using real-world assets. These include real estate, trade finance, and sukuk markets. The regulation may enable secure and on-chain settlement systems. Analysts say this could unlock more institutional participation in tokenization.

Supporters view the bill as a key step for digital asset innovation. Critics point to risks of financial fragmentation. The rise of “quasi-banks” through corporate stablecoins may reshape market roles. Global coordination on regulation remains limited. This raises concerns about uneven oversight across regions.

The GENIUS Act could redefine digital dollar usage in global trade. Its full impact depends on how firms and markets respond. As the House considers the bill, global stakeholders are watching closely. The balance between innovation and stability remains a central issue.

Source: Ainvest.com | View original article

Source: https://news.bitcoin.com/us-dollar-may-weaken-as-stablecoin-regulations-reshape-global-finance/

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