Circle Internet Financial announced on Thursday that it plans to launch a Euro denominated stablecoin (EUROC) backed by a single European currency by the end of the month.
The launch is part of an effort by US Dollar stablecoin (USDC) issuers to meet user demand and accommodate competition as competitors such as Tether and Malta-based Stasis, where Leady has launched its own EURt and EURS-backed stablecoins, respectively.
Tether is the largest issuer of the dollar pegged coin, USDT, with a market capitalization of over $70 billion compared to USDC, which has a market capitalization of $54 billion.
Circle plans to launch Euro Coin as an ERC-20 token on the Ethereum blockchain on June 30th. The global cryptocurrency fund said additional blockchains will support stablecoins later this year.
Circle has revealed that after launch, several exchanges will support the Eurostablecoin, including Anchorage Digital, Binance.US, Bitstamp, FTX, Huobi Global, Ledger and MetaMask Institutional.
The company said the euro would be fully backed by euro-denominated reserves held by financial institutions located within US jurisdictions.
Silvergate Bank, a California-based cryptocurrency bank, is one of the US-based banks specializing in issuing euros. Euro stablecoins are initially only accessible through Silvergate’s Euro SEN network, which requires prospective clients to have an active banking relationship with the bank.
The company said that once trading is initiated on the exchange, people and businesses can trade in Euros, withdraw Euros from the exchange and put them in an Ethereum-compatible wallet.
The digital asset market stimulates demand.
Circle’s launch of the EUROC stablecoin demonstrates the growing demand for Euro-based products. Currency indicator data shows that the use of US dollar-denominated stablecoins in the European market is significantly higher than that of Euro-denominated stablecoins.
Many European participants in the digital assets sector are using U.S. dollar-based stablecoin products due to increased liquidity.
However, given that Europe has the largest cryptocurrency economy in the world, there are good reasons to force European market participants to continue to pursue the use of euro-based stablecoins.
As European financial institutions and institutional investors continue to enter the digital asset market, interest in Euro-based stablecoins is growing.
As custodial and trading services for many DeFi tokens are provided by European banks, this is likely to contribute to growing demand for Euro-based stablecoin products.
This is especially true when European Forex market participants enter DeFi products. DeFi users are encouraged to use a stable Euro currency because they are exposed to exchange rate risk when using a stable currency denominated in US dollars.