Euro Coin, the new euro-based stablecoin whose value will have parity with the euro

Last week, Circle announced that on June 30 it will launch Euro Coin (EUROC), a new stablecoin whose value will remain pegged to the euro. This is undoubtedly a very interesting development, as it expands the scope of stable cryptocurrencies beyond those that have a parity with the US dollar.

It is true that this is not the first stablecoin whose price reflects the euro exchange rate, but we are talking about a project of the same company that has developed USDC together with Coinbase. This is no guarantee of anything, of course. However, it is important to note that USDC is routinely audited to corroborate the status of its reserves, and the idea is that the same will happen with its “sister” euro-based cryptocurrency.

As explained by Circle, Euro Coin will be backed entirely in euros deposited in European bank accounts. And the intention of its developers is to exploit the potential of the combined use of its stablecoins. “Together, Euro Coin and USDC can unlock new possibilities for multi-currency digital banking and near-instantaneous currency exchange, where daily volume in traditional markets can exceed $6.6 trillion globally,” they explained in their announcement.

EUROC will try to gain a foothold in a market dominated by stablecoins tied to the value of the U.S. dollar. Currently, the market capitalization of all stable cryptocurrencies that offer parity with the euro cannot be accurately measured; this is because the information available for each token is not verified. Thus, for example, EURT, from Tether Limited, is listed on CoinMarketCap with a market capitalization equivalent to just $42 million, while CoinGecko reports it to be $218 million. Whatever the true figure, it is a crumb compared to USDT’s $69 billion market cap.

Will there be a digital euro?

Circle’s project for a stablecoin linked to the euro revives questions about the feasibility of developing a digital euro. Recall that the European Central Bank (ECB) is exploring the possibility of implementing it, but it is still nowhere near becoming a reality. In fact, the most important evolution of the euro in recent times has been the redesign of its banknotes.

According to the institution, research on the digital euro has been underway since 2021 and will last until October 2023; once this process is completed, it will be analyzed whether or not to start working on it. In any case, it has already been made clear that this project is encompassed in the category of CBDC (Central Bank Digital Currency); that is, it has nothing to do with cryptocurrencies.

“Cryptoassets are not central bank money. They differ from it in that their prices are volatile, making them difficult to use as a means of payment or unit of account, and in that they are not backed by any public institution. Citizens would be able to trust a digital euro as much as cash, as both forms of money would be backed by a central bank,” says the ECB website.

For the time being, we will have to see if Circle’s project with Euro Coin gets good results. As we already said, stablecoins linked in the European currency are still little explored territory in the crypto ecosystem and can bring many novelties, good and bad.

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