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BlackRock, the world’s largest asset manager, says a new U.S. law is helping to make stablecoins more important in global finance. It also believes this supports the case for Bitcoin as a strong long-term investment.
In a recent report, BlackRock talked about the Genius Act, a new law passed this month. The company said this law is a big step in making stablecoins a regular and trusted way to send and receive payments in the future.
Stablecoins are digital tokens that are tied to real money, like the U.S. dollar. They combine the fast transfer features of cryptocurrency with the price stability of traditional money. Even though stablecoins only make up about 7% of the crypto market, BlackRock said they have grown quickly, reaching $250 billion in value since 2020.
The Genius Act sets clear rules for stablecoins in the U.S. It says that stablecoins should be used mainly for payments, not for investment. It also limits who can issue stablecoins, only regulated financial institutions will be allowed to do so.
BlackRock believes this kind of rule could make the U.S. dollar even more powerful. It might help create a digital dollar system for payments across the world, especially in countries with growing economies.
The law also controls what kinds of assets stablecoin companies can use to support their coins. Most of these assets will need to be short-term U.S. Treasury bills, which could lead to more buying of U.S. government debt. But BlackRock said it likely won’t change interest rates much.
On the topic of bitcoin, BlackRock said it still sees it as a special kind of investment. Bitcoin is up 25% so far this year, and BlackRock thinks it can help boost long-term returns.
In conclusion, BlackRock said that stablecoins are becoming a key part of the future of finance, and the U.S. is trying to lead the way in digital money through smart regulation.AskChatGPT