Stablecoins are here to stay says BlackRock
In a new report, the asset manager highlighted the impact of the recently passed Genius Act, writing, 'New U.S. legislation – notably this month's Genius Act – is cementing the role of stablecoins as a payment method in the future of finance.'
BlackRock (NYSE:BLK) views stablecoins as one of 'five mega forces' shaping future returns.
'Stablecoins are digital tokens pegged to a fiat currency and backed by reserve assets,' BlackRock explained. 'They fuse the frictionless transfer of crypto with the perceived stability of fiat currency.'
While stablecoins currently make up just 7% of the crypto market, BlackRock noted adoption has grown rapidly to around $250 billion since 2020.
The firm said the Genius Act creates 'a comprehensive payment stablecoin framework,' defining stablecoins as payments instruments rather than investments and restricting issuance to regulated financial institutions.
'This regulation could reinforce dollar dominance by enabling a tokenized U.S. dollar-based ecosystem for international payments,' BlackRock said, particularly in emerging markets.
The Act also sets strict rules for what reserve assets stablecoin issuers may hold, primarily short-term U.S. Treasurys.
BlackRock said this could spur further buying of Treasury bills but added, 'The impact on yields will likely be limited.'
On bitcoin, BlackRock wrote: 'We still see bitcoin as a distinct return driver,' citing its 25% gain year-to-date.
It concluded: 'We see stablecoins as a new part of the future of finance – and new U.S. legislation is aiming to put the U.S. at the center of digital asset innovation.'
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