Towards a rupee-pegged stablecoin

Genius Act aftermath: Besides revenue reasons, control over crypto assets is critical for India to get a share in the digital asset infra involving decentralised finance

- A DAMODARAN

THE BUZZ ABOUT a possible global monetary reset was in the air, long before US President Donald Trump signed the Genius Act in July. Since March, the US dollar has been weakening in relation to gold and other leading currencies. The gap between the US dollar index and the price of gold and Bitcoin has been continuously widening since June.

However, the Genius Act does not seek to address any of these problems. Rather, its focus is to assure the supremacy of the US dollar as the principal reserve currency of the world by turning it into a faster and efficient payment medium.The latter is sought to be achieved by hitching the dollar toa new class of stablecoins.

Stablecoins, which are crypto tokens minted on smart contract blockchains like Tron, Solana, and Ethereum, are unhinged from time-consuming payment and settlement processes. Besides, theyassure stable value for crypto assets, which are prone to high price volatility.

Under the Genius Act, a new set of “payment” stablecoins titled the “USAT” will be issued by Tether International for circulation within the US. Every unit of USATis pegged ata 1:1 basis with the US dollarand/or other eligible reserve assets including short-term Treasury Bills.