After carefully assessing the recently passed stablecoin regulation, giant asset management firm BlackRock has stated that the enactment of the GENIUS Act could enhance dollar dominance.
According to recent analysis by BlackRock, the recently passed GENIUS Act was likely to expand the cause for a digitalized dollar-centric payments structure following the institutionalization of dollar-pegged stablecoins.
Law Will Lead to Dollar Dominance.
BlackRock believes that the regulatory clarity occasioned by the passing of the law aligned with concerted efforts to place stablecoins in the middle of traditional finance systems. Accordingly, the move could benefit dollar dominance in the burgeoning digital economy.
The firm further opined that an increase in stablecoin issuance was unlikely to exert pressure on Treasury yields. According to BlackRock, Treasuries were likely to be offset in shifts using safer assets like short-term bond ETFs. Explaining the firm’s position on the likelihood of dollar dominance, BlackRock explained:
“If a tokenized dollar system is established, it will allow easier access to the dollar even in emerging countries where the distribution of the traditional dollar is difficult […] This can stimulate demand for a more stable digital dollar rather than local currencies with high volatility.”
Growing Market Trend
Apart from positively affecting the US dollar dominance, BlackRock’s analysis also extended to the flagship cryptocurrency, Bitcoin. Bitcoin has recently registered a year-to-year gain exceeding 25% which has increased its appeal as an alternative form of investment.
The firm observed that Bitcoin carried unique characteristics like a decentralized nature and limited supply that make it complementary to traditional assets. BlackRock’s recognition of the ongoing institutional adoption of Bitcoin aligns with a growing market trend where investors are increasingly including cryptocurrencies in their portfolio diversification strategies.
Clear Regulatory Framework
According to BlackRock, the role of the GENIUS Act in legitimizing dollar-pegged stablecoins is pivotal in enhancing dollar dominance. By establishing a clear regulatory framework, the legislation will eliminate uncertainty among market participants and facilitate broader adoption.
The asset manager opines that the new legislation legitimizing stablecoins as an official payment method will play a pivotal role in perpetuating dollar dominance into the future.
The establishment of a clear regulatory framework will help eliminate uncertainty for market players and promote broader adoption. The firm further suggests that the adoption of stablecoins aligns with wider market trends that have seen institutional investors increasingly allocating crypto assets as an integral part of their portfolio diversification strategies.
Conclusion
The analysis by BlackRock highlights the importance of regulatory clarity and how it could eventually strengthen the US’s influence in financial matters and ultimately strengthen the dollar’s dominance. By enabling the use of a tokenized dollar as a payment method, its use as a payment network could go beyond the boundaries established by traditional banking methods.
The use of stablecoin as an international payment method could soon become as simple as sending a text message and seeing dollars move across borders. The use of a digitalized dollar will eliminate high fees and unnecessary delays associated with existing international payment systems.
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Summary
- BlackRock has predicted that the newly enacted GENIUS Act will strengthen the position of the US dollar in international business.
- The asset manager believes that the institutionalization of dollar-pegged stablecoins will expand the dollar-centric payment structure.
- According to BlackRock, a tokenized dollar system will drive the demand for a digital dollar in emerging financial markets.
Frequently Asked Questions
What are the highlights of the GENIUS Act?
The stablecoin bill sought to create licensing and regulatory requirements within the US for the use of stablecoins locally and internationally. The bill sets strict rules for stablecoin issuers and consumer protection.
Did the GENIUS Act get passed?
US President Donald Trump signed the GENIUS Act into law on July 18, 2025. The new law paves the way for the US to potentially lead the global digital currency revolution.
Is Bitcoin a stablecoin?
Stablecoins are cryptocurrencies that are pegged to tangible assets and fiat currencies like the US dollar. Their prices are not significantly affected by market volatility. Bitcoin is therefore not a stablecoin.
Glossary to Key Terms
Stablecoin: Stablecoins are cryptocurrencies with a stable price because their stability is achieved by being pegged to stable assets like gold or fiat currencies.
GENUIS Act: A law that creates licensing and regulatory requirements for domestic payment stablecoin issuers and standards for participation in the US.
Reference
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