Circle, the issuer of the USDC, has just unveiled its new stablecoin. Dubbed “Euro Coin,” the new cryptocurrency will be backed by the euro exchange rate and will be fully backed by Circle’s reserves. The company’s CEO sees the euro as a real opportunity for development and a market to seize, at a time when the European market is struggling to agree on a regulation of digital assets.
Circle unveils euro-backed stablecoin
Circle, the issuer of the USDC stablecoin, has announced its new stablecoin, which, unlike the one already on the market, will be fully backed by the euro.
Named “Euro Coin” and bearing the ticker EUROC, this new crypto-currency will be released on June 30 on major exchanges such as Bitstamp, FTX, Huobi Global and Binance.US.
The stablecoin will thus join the – small – list of euro-backed crypto-currencies, like EURt from Tether, the issuer of USDT, the stablecoin with the largest market capitalization for several years. Others exist, such as EURL or EURS, but it is the dollar-backed stablecoins that largely dominate the market.
Circle believes that the EUROC will benefit from the same quality guarantees as the USDC, both in terms of transparency and security, to ensure similar adoption. This implies that, like the USDC, Circle’s reserves will be able to support the EUROC with a 1:1 ratio.
Circle’s reserves for this purpose will now be secured in part at Silvergate Bank, a U.S. Federal Reserve Bank specializing in digital assets.
Also according to Circle, an audit of its reserves will be carried out by an external firm on a monthly cycle, again to prioritize maximum transparency.
A stablecoin deployed in America
Although it may seem paradoxical, EUROC will first be deployed in the United States. This is understandable for Circle, as European authorities are struggling to agree on a fair regulation of digital assets on European soil.
Indeed, the long-awaited MiCA regulation, which is expected to be finalized by the end of this month, plans to be relatively strict with regard to these crypto-currencies backed by fiat currencies.
Eva Kaili, the vice president of the European Parliament, said last year on the subject that stablecoins could damage European financial integrity:
“[Stablecoins] are relevant to MiCA because they could indeed raise concerns about the European Union’s monetary policy, stability and sovereignty.”
But Circle gets it, even if the European Union seems to be trying hard to miss the boat on digital assets and the opportunities that entails, the euro is very far from being irrelevant.
According to data from the Bank for International Settlements (BIS), the euro is the second most important fiat currency in the world behind the dollar for trade. According to its triennial survey released in 2019, the euro appears in 32 percent of currency exchanges.
Initially conceived as a way to deploy liquidity to cryptocurrency holders, the use of stablecoins has found increasing interest. Today, stablecoins are used as a means of transaction for the unbanked.
And their success is such, that they seem to be going to overshadow the traditional system. Indeed, as an example, Circle has recently launched business accounts totally dedicated to USDC transactions, a model that is much less restrictive than the traditional banking system.
EUROC to be launched on Ethereum first
Scheduled to be released on June 30, EUROC will be built on the Ethereum blockchain (ETH). However, Circle said that this is a launch pad, and that the future is definitely “multi-chain”.
It will therefore be launched as an ERC-20 standard token, and will be compatible with all Ethereum wallets.
In addition to the exchanges mentioned above, the Euro Coin will be supported from the moment of its release by the largest protocols such as Compound, Curve, DFX, Uniswap, as well as on Ledger hardware wallets. Circle also states that blockchain developers can already integrate the EUROC smart contract.
For Jeremy Allaire, Circle’s CEO, the arrival of EUROC signals the beginning of a new era:
“There is a clear market demand for a digital currency denominated in euros, the second most traded currency in the world after the US dollar. With the USDC and Euro Coin, Circle is helping to usher in a new era of fast, low-cost, secure and interoperable value exchange worldwide.”
Circle’s entry into the European stablecoin market is not insignificant. The company, which currently issues the second most capitalized stablecoin in the market, is taking a significant lead here over its future European competitors, who will most likely be forced to undergo more regulation.
At the time of writing, the stablecoin market has a total market capitalization of more than $157 billion.