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Societe Generale plans to launch its own stablecoin on a cryptocurrency exchange, becoming the first major bank to offer digital tokens that track the price of hard currencies to a wide range of investors.
France’s third-largest bank will begin trading its own stablecoin called EUR CoinVertible on Luxembourg-based exchange Bitstamp on Wednesday.
The move marks a significant step for traditional financial institutions to enter a portion of crypto trading currently dominated by digital asset specialist firms. Stablecoins are receiving increasing attention from regulators, with the UK last month launching a proposal to introduce tokens into the real economy.
Stablecoins are a type of digital cash that tracks sovereign currencies and makes it easier for crypto traders to buy and sell them in the market. The majority of transactions in cryptocurrencies such as Bitcoin occur through stablecoins tied to the US dollar.
The $130 billion market is dominated by British Virgin Islands-registered Tether and US-based Circle, which has faced questions over audits of the reserves backing its tokens. SocGen said EUR CoinVertible will be fully backed by euros.
“The crypto ecosystem is highly concentrated in a small number of existing stablecoins, 90% of which are denominated in USD. . . There is a place for banks in this space, and they are very focused on stablecoins denominated in euros. We definitely think there’s a place for it,” Jean-Marc Stenger, chief executive of SocGen Forge, the bank’s digital assets arm, told the Financial Times.
Some large investment banks, such as JPMorgan, have their own stablecoins, but they are only available to a small number of institutional clients. In contrast, SocGen’s stablecoins will be widely available for transactions.
Stenger said he expects the bank’s stablecoins to be used to settle transactions in digital bonds, funds and other assets as traditional financial institutions explore digital ledgers.
“The best way to drive (investor) interest is to grow through the usual channels and locations used in the cryptocurrency industry: listing products on cryptocurrency exchanges,” he said. Ta.
Mica, the EU’s flagship digital asset regulation, will take effect next year, and Stenger said SocGen’s stablecoins are built around the rules, adding that “very few stablecoins are Mica compliant.” added.
Asset managers and banks are increasingly considering tokenizing assets such as bonds and funds that require digital cash, but the market is still small. In a development welcomed by the industry, the UK Treasury last month gave fund managers the green light to tokenize their funds as long as they contain “mainstream” assets.
On Monday, AXA Investment Managers invested in a digital green bond using SocGen’s stablecoin.
Stenger said the stablecoin was built to be used on a variety of platforms and across a variety of financial services players.
He added that because the euros are held in a trust managed by a third party, token holders do not face the risk of exposure to the French banks themselves and “can rely directly on the collateral assets of the stablecoin.”
“It’s available to anyone who wants to use it, whether it’s on our own platform or on another platform,” he added.
