BlackRock, the world's top asset manager, has opined that stablecoins could reinforce the case for Bitcoin, the leading cryptocurrency.
Bitcoin is viewed as a "potential return diversifier" by the asset management behemoth.
The financial titan has noted that Bitcoin has had a "banner year," soaring by more than 25%.
Stablecoins reinforcing dollar dominance
BlackRock has noted that the recent passage of the stablecoin legislation in the US is cementing the role of dollar-pegged tokens as a "payment method" in the U.S.
The financial behemoth is convinced that the GENIUS Act, which regulates the stablecoin sector, will be able to bolster the dominance of the US dollar.
One would expect some upward pressure on Treasury demand due to growing stablecoin issuance. However, BlackRock predicts that the rise of stablecoins will not dramatical affect short-term Treasury yields. The asset manager has explained that the money will come from investors who hold similar safe assets like short-term bond ETFs. Hence, stablecoins will not add much to new demand since money will be simply recycled.
Moreover, the market is being flooded with short-term debt, so supply is actually outstripping demand.
BlackRock's stablecoin play
BlackRock has been part of the burgeoning stablecoin sector for quite for time. In March 2024, the massive asset manager launched a blockchain-based tokenized liquidity fund that invests in U.S. treasuries.
In 2022, BlackRock took a minority stake in USDC issuer Circle, which went public earlier this year.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team