The GENIUS Act, which recently passed the Senate Banking Committee, is expected to become law by summer 2025, establishing formal regulations for stablecoin issuers.

In response to the dominance of USD-denominated stablecoins, JPMorgan is expanding its Kinexys blockchain payment network to accommodate currencies beyond the dollar.

Standard Chartered's analysts believe that forthcoming legislation will legitimize stablecoins and enhance the U.S. dollar's role in digital finance.

Standard Chartered anticipates a shift towards the reserve model used by USDC issuer Circle, which maintains a significant portion of its reserves in Treasury bills.

While initiatives like the IMF's Special Drawing Rights have not gained traction, a sufficiently liquid and diversified digital currency could appeal to central banks and sovereign wealth funds in the future.

New SEC guidance may exempt certain stablecoins from securities regulations if they adhere to strict standards, potentially impacting their adoption and growth.

Geoff Kendrick, Head of Digital Asset Research at Standard Chartered, emphasizes that the projected growth of stablecoins will necessitate an additional $1.6 trillion in U.S. Treasury bills as reserves.

Analysts predict the total supply of stablecoins could grow from $230 billion today to $2 trillion by the end of 2028, with issuers potentially holding around $1.75 trillion in T-bills.

Despite the current strength of USD-backed stablecoins, there are long-term risks to dollar dominance if the market shifts towards multi-currency or non-dollar-pegged stablecoins.

Italy’s Economy Minister, Giancarlo Giorgetti, has expressed concern over the rise of U.S. dollar-backed stablecoins, viewing them as a threat to the euro's global standing.

Standard Chartered views U.S. regulatory advancements, including the GENIUS Act, as a catalyst for a major structural change in global liquidity, positioning stablecoins as key players in digital payments.

The anticipated rise in stablecoin reserves is expected to bolster demand for U.S. dollars, reinforcing the currency's dominance in global trade and cross-border transactions.