- Euro stablecoins appear to be having a moment, but traders aren’t interested.
- Societe Generale launched its own stablecoin, EURCV, last week. It did a little over €600 in volume yesterday.
- Deutsche Bank plans to launch its own euro-based stablecoin
Euro stablecoins seem to be having a bit of a moment, just not with traders. Societe Generale became the first major bank to list a stablecoin last week.
On Wednesday Deutsche Bank’s DWS said it plans to launch its own version. But there’s one problem with this euro-pegged cryptocurrencies: traders don’t like them.
Let’s dig in.
Adoption struggles to match launch hype
SocGen’s Coinvertible has seen little to no action since it went live on crypto exchange Bitstamp. The budding stablecoin had just €630, or about $692, in trading volume across two pairs over the past 24 hours, according to Bitstamp data.
Steakhouse Finance co-founder Sebastien Derivaux told DL News that progress has been slow.
“Euro based stablecoins remain very small compared to their US dollar counterparts,” he said.
Derivaux added that one reason for slow adoption is US dollar dominance as payment for web3 workers, and that they “tend to stay on-chain with EUR stablecoins.”
On the positive side, Derivaux points to the European Union’s recently approved Markets in Crypto-Assets regulation which aims to set a framework for crypto laws in the bloc.
MiCA-compatible stablecoins will “greatly lift the value proposition of EUR stablecoins,” and drive adoption, Derivaux said.
The dominance of US dollar stablecoins tracks that in traditional finance, where US dollars are the global reserve currency and account for 88% of all foreign exchange transactions, according to Statista.
DWS will launch its euro-denominated stablecoin through a partnership with market maker Flow Traders and Mike Novogratz’s Galaxy Digital. The project, dubbed AllUnitiy, aims to “deliver the leading regulated EUR-denominated stablecoin.”
AllUnity will soon begin the process of applying for an e-money licence with German regulator BaFin. It intends to launch its stablecoin in the next 12 to 18 months, according to the announcement.
DWS CEO Stefan Hoops said AllUnity’s activities “will bridge the gap between the traditional and digital finance ecosystems” to provide core services to institutions and private investors.
Hoops comments suggest the stablecoin will primarily be used between businesses, as opposed to being a retail and institutional product.
Prelude to a CBDC?
Europe is pursuing a central bank digital currency, but it won’t be released until at least 2025. Hoops said firms need to fill the vacuum to maintain European influence in stablecoin markets.
“Given that a euro central bank digital currency will take a few more years,” Hoops wrote on LinkedIn, “a broadly accepted, regulated EUR stablecoin is desperately needed if Europe wants to drive digital finance.”
Despite SocGen’s head start, Hoops says there will be only one winner in the euro stablecoin race.
“While it is clear that Europe needs one, it really only needs ONE. Whoever issues the first broadly accepted, broadly accessible, fully collateral-backed, fungible, regulated, euro stablecoin will have a unique competitive position.”
Hoops said that no existing projects have met those criteria, despite “some interesting first projects.”
When it comes to US dollar-backed stablecoins, the market is heavily concentrated on one player.
Tether’s USDT dominates with $90 billion in circulation, or around 70% market share. Other US dollar coins like Circle’s USDC, which has $23 billion in circulation, and Maker’s DAI with $5.2 billion, have maintained significant market shares.
While it remains to be seen if the euro stablecoin market will heat up and achieve widespread adoption, the influx of institutional projects has crypto natives like Derivaux feeling optimistic.
“By 2025, Europe will have a deep ecosystem of EUR stablecoins, most likely all permissionless,” he said.
Crypto market movers
- Bitcoin fell 1.3% in the past 24 hours to trade around $42,380. The crypto market rallied and then sputtered following the Fed’s last meeting of the year on Wednesday.
- Ethereum is neutral at $2,275 with a rise of 0.65% since Wednesday.
What we’re reading
- FASB: Crypto Must Be Recorded At Fair Value Starting 2025 — Milk Road
- Vitalik Buterin Supports Integrating Zero-Knowledge Ethereum Virtual Machines Into Main Ethereum Chain — Unchained
- Coinbase To Launch Crypto Spot Trading Beyond The U.S. — Milk Road
- The crypto projects venture capitalists are eying for 2024 — DL News
- Why 163-year-old ratings firm S&P suddenly decided to rank stablecoin Tether — DL News
Tyler Pearson is a junior markets correspondent at DL News. He is based out of Alberta, Canada. Got a hot tip? Reach out to him at ty@dlnews.com.
