Europe’s largest asset manager warns US stablecoin policy can destabilise global payments system

Amundi, a European asset management firm, warned that the U.S. GENIUS Act bill passed last month by the Senate would harm the global economy.  The bill seeks to regulate U.S. dollar-pegged cryptocurrency tokens.  

The GENIUS Act ( Guiding and Establishing National Innovation for U.S. Stablecoins) views stablecoins as a means of payment rather than security, creating rules that put the issuer under scrutiny by state and federal regulators. Faryar Shizrad, the Chief Policy Officer at Coinbase, revealed last month that passing the GENIUS Act in the Senate is a step toward making the U.S. a world leader in digital assets and blockchain innovation. 

The GENIUS Act now moves to the House of Representatives 

According to Jeremy Allaire, the founder and CEO of Circle , a stablecoin platform, the bill was supported by fifty Republicans and eighteen Democrats and now moves to the House of Representatives for approval before it is signed into law by President Donald Trump. Allaire believes the bill will drive the U.S. economy and national competitiveness in the future.

Amundi Asset Management’s chief investment officer, Vincent Motier, raised concerns that the bill could be genius or evil. He added that the U.S. will benefit from the dollar-pegged stablecoins since they trigger the buying of U.S. Treasury bonds under the U.S. Act as the country struggles with budget deficits. Amundi believes this could create problems for the U.S. and other countries by creating an alternative for the USD and could further weaken the currency. 

In April, Giancarlo Giorgetti, Italy’s finance minister, warned that U.S. stablecoin policies have a bigger impact on European financial stability than the Trump trade war. He cited the potential of stablecoins undermining the euro’s dominance in cross-border payments and urged EU lawmakers to take steps to boost the euro’s position as an international currency. He added that the digital euro developed by the European Central Bank (ECB) will remove the need for Europeans to go for foreign solutions. 

Mortier worries that a mass adoption of stablecoins would impact the financial stability and noted the dollarization issue, citing that they would become “quasi-banks”. He believes people would deposit money in a coin, assuming that they can take it in and out whenever they wish and use it as a direct means of payment. 

Mark Hays, an associate director of crypto and fintech at the Americans for Financial Reform, believes the GENIUS Act is an important step, but it has its implications. The crypto industry and allies from the White House and Capitol Hill are using the bill to lobby for an uncontrolled experiment. 

Andrew Bailey of BOE warns that stablecoins threaten public trust in money

Andrew Bailey, Governor of the Bank of England, has warned today against stablecoins, which he believes risk undermining the public’s trust in the financial systems. He urged central banks to look carefully into payment system innovations that may introduce new problems into the financial system. 

BOE Governor gave his speech at the Andrew Crockett Memorial Lecture, arguing that if stablecoins become the new form of payment, there has to be a decision that ensures the singleness of money, trust, and the role to be played by the reserve currency. He previously spoke on the threat of stablecoins, mainly due to their increased use, and put it on his agenda. He was made the new head of the Financial Stability Board, which monitors global finance. He believes the point of official reserves is preserving financial stability in the event of stress and supporting financial systems’ liquidity under challenging situations.

World Liberty Financial, a crypto startup owned mainly by the Trump family, can gain if the bill is signed into law. The startup announced that it will issue a new stablecoin, USD1. Analysts believe that if the bill passes, the startup will become dominant in the crypto ecosystem. 

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