Do we all know what are stablecoins?!
By its definition, stablecoins are a special class of digital currency that are created by private companies and transferred using blockchain and distributed ledger technology. Stablecoins are typically anchored to a reference asset like the U.S. dollar and were created to simplify transactions using cryptographic assets.
So, if we draw a parallel with real currencies, they have their counter value in some other valuable, which is usually gold. Following this logic, stablecoins back their counter value with real currency.
Most popular stablecoin project is definitley - Tether.
The Tether project, originally called Realcoin, was launched in July 2014 by the company Tether Ltd. based in Hong Kong. The project was launched with the aim of offering a stable cryptocurrency by establishing a link with traditional currencies, implying high transparency and minimal transaction costs. In the case of Tether, a connection with the US dollar (USD) was established in the ratio 1:1 (1 USDT = 1 USD). So the company Tether Ltd. for each Tether (USDT) issued, it needs to have coverage in US dollars in its bank accounts.
On todays market stablecoins are used mainly for making trade between various cryptocurrencies easier and for making purchases on a blockchain network for products and services.
Due to the early emergence of stablecoins based on the USD currency, the most popular coins are those that just use the USD to provide liquidity.
BUT WHAT ABOUT THIS STABLECOINS?!
Coins that keep their value in the EUR currency are gaining more and more popularity.
I bring you list of stablecoins that are backed by EUR fiat.
6. sEUR (SEUR)
Main factor why these stablecoins are not widely used on cryptomarkets is - European money regulation law.
The first to create a euro stablecoin was of course the team behind the Tether project. But unfortunately, although the project is alive, it is not particularly profitable and generally accepted. The laws that govern within the European Union are very complicated and only recently has work been done to regulate the crypto market.
Going in this direction, the European Union has announced the release of its own digital coin, but they do not hope to release it before 2026.
The European Union is of the opinion that cryptocurrencies have no monetary value and, as they state, these assets are not guaranteed or managed by any central institution. In other words, no one guarantees you that you will be able to exchange it for money when you need it. Negative interest rates on bank deposits in the eurozone have made reserve-backed stablecoin business models virtually impossible.
But still - there is hope.
One project will try to gain all licenses to be real and accepted EURO backed stablecoin.
As they say on their website: "- Circle is a global financial technology company helping money move at internet speed. - That’s why we welcome clear regulation and value our engagement with regulators and policymakers. We partner with leading global financial companies and share detailed reports on how our stablecoins are backed. We are leading a more responsible, stable future for crypto."
They are developers of second most used stablecoin baked in USD$ - USD COIN (USDC)
Euro Coin is issued by Circle under the same full-reserve model as USDC, a trusted dollar digital currency with more than $43 billion in circulation.
Designed for stability, Euro Coin is 100% backed by euros held in euro-denominated banking accounts so that it’s always redeemable 1:1 for euros.
Their mission is to create fully accepted and compilant stablecoin to all EU laws but there are two main problems.
First one is MiCA regulation. The Markets in Crypto-Assets Regulation (MiCA) is set to be a new EU regulation that could be used as the blueprint for other jurisdictions to follow when regulating crypto-asset related activities.
Second one is EU plan to launch their own cryptocurrency - Digital Euro
For Circle, it will be almost impossible to avoid applying for the appropriate licenses in the EU and having the EUROC supervised by EU authorities.
But - one big plus for Circle - they are not running from it - they want it.
If their EURO backed stablecoin comes first on regulated EU markets - for sure they will gain huge profit.
On the other hand, the problem for the EU with Circle's stablecoin is that it will be issued on American soil, under American laws, and all liquidity will be in American banks. They are holding fiat in one of biggest American bank - BNY Mellon | Consider Everything - Bank of New York Mellon.
One more thing is worth of mentioning - they are audited and attested by a 3rd party - Grant Thornton LLP
Grant Thornton LLP issues monthly attestations of the Euro Coin reserve and Circle publishes the attestation reports on their website. Each month’s report comes at the end of the following month (e.g. June’s report is published at the end-of-July). Circle’s financial statements, which will include the Euro Coin reserve, are audited annually and filed with the SEC.
If we look Theye are on the right track to become one of the first and true EURO STABLECOIN.
Finally, a small summary. Stablecoins are very useful and used. Due to regulatory relief, most stablecoins use USD to be liquid. Euro stable coins are not so much in use exclusively because of the legislation of the European Union, but they certainly exist on the market and are used for various purposes. We can only hope that in the future there will be more stable coins that can be used to pay for everyday tasks such as paying for a beer in pub or paying bills with telecom operators.
Do you use stablecoins and for what?
Do you use EURO backed stablecoins?
Write down in comments and also if you are interested in some detailed info about other EURO stablecoins - let me know.
