French banking giant Société Générale launches euro-backed stablecoin

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Société Générale (NASDAQ: SCGLY) has made history by becoming the first major regulated banking institution to launch a stablecoin for the masses.

Known as EUR CoinVertible (EURCV), the new stablecoin was listed on the European digital asset exchange Bitstamp. It’s backed only by cash deposits held by reputable third-party credit institutions.

Stablecoins have become a lifeblood of the digital asset industry, accounting for a sizable portion of daily trading. However, they face two challenges that EURCV is looking to solve.

The first is that the market is dominated by U.S. dollar-denominated stablecoins. The top three stablecoins—Tether’s USDT, Circle’s USDC, and MakerDAO’s DAI—account for 94% of the $128 billion stablecoin market cap. While some projects have attempted to chop away at this dominance with stablecoins backed by the euro, the Japanese yen and other major currencies, they have barely made a dent.

In an interview with the Financial Times, Jean-Marc Stenger expressed the bank’s belief that there’s a need for a euro-backed stablecoin.

“The crypto ecosystem is highly concentrated on a few existing stablecoins, 90% denominated in U.S. dollars…we definitely think that there is a place for a bank in this field, and there is a place for a euro [denominated] stablecoin,” stated Stenger, who leads Société Générale Forge, the bank’s digital assets arm.

Second, all the top stablecoins are issued by projects with questionable regulations. Tether has been convicted of financial crimes in the U.S. and forced to pay fines. EURCV, in comparison, is issued by one of the most trusted financial organizations in the world.

Being compliant will become more critical than ever in 2024, when Europe’s Markets in Crypto Assets (MiCA) framework kicks in. According to Stenger, EURCV was built with MiCA in mind and adheres fully to the framework. He believes that currently, “very few stablecoins are compliant with Mica.”

Société Générale isn’t the first major bank to issue a stablecoin. America’s largest bank, JPMorgan (NASDAQ: JPM), issued its JPM Coin in 2019 for instant payment settlement. However, JPM Coin is only available to select institutional clients. EURCV will be available on a public exchange for any interested user.

While existing stablecoins have only been used in the digital asset ecosystem, the French bank intends to disrupt other sectors as well, including digital bonds. This week, Axa Investment Managers, a subsidiary of French insurance behemoth Axa (NASDAQ: AXAHF), invested in a digital green bond using EURCV.

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