Société Générale’s Foray into Stablecoin Innovation

• Société Générale, the third largest bank in France, has officially announced the release of EUR CoinVertible. the first euro-pegged stablecoins. 
• The upcoming Markets in Crypto-Assets Regulation has been approved and is expected to take effect in 2024.
• According to Binance, the top fixed stablecoins have recorded a positive net surplus of $3.8 billion in Q4 2023. 

As 2023 draws its final curtains, the year has left a considerable mark behind. Despite the industry struggling to regain its former glowy, a ray of hope has paved the way for the future of Web3. In the past six months, the sector has noticed a significant rise in the use of stablecoins. With many economies affected by the globe’s current state of affairs, many have opted to seek the refuge, stability, and faster transaction speed stablecoins have offered. 

This rising trend ignited the increase of crypto-payment gateways, urging many international payment systems like Mastercard, Visa, and Paypal to take up the new initiative. Furthermore, Banks and traditional financial systems have also taken up the latest trend, inspiring many well-known banks to dive into the concept. 

In recent news, Société Générale, France’s third-largest bank, has officially released its first euro-pegged stablecoin, the EUR CoinVertible (EURCV). This contemporary will kick the adoption of DeFi base systems into high gear as the use of stablecoins continues to rise.

Why Stablecoins?

Its volatility is a primary flaw and empowering factor in the crypto ecosystem. High volatility gives cryptocurrency the edge it has consistently had over fiat currency. Unfortunately, the same principle is also why most traditional financial institutes have rejected cryptocurrency integration. In a nutshell, cryptocurrency is too unstable. The basic concept of the industry revolves around supply and demand; the higher the need for a specific crypto coin, the higher its value, and vice versa. 

In addition, the total supply of the crypto cons significantly affects its valuations. This is why Bitcoin has a high valuation; aside from being the original cryptocurrency, its finite supply and high demand directly affect its supply. Thus, many banks and financial institutions have rejected adopting cryptocurrency since it poses a significant risk, eventually leading to economic suicide. Therefore, the big question was asked after Bitcoin gained a substantial fanbase and value: how do we deal with volatility?

Also, Read Stablecoins are empowering Africa’s economic growth amid currency depreciation.

Through this question, developers initially perceived numerous threats but made them stablecoin, and CBDCs proved more practical. Stablecoins, as per the name, generally stabilize the concept of cryptocurrency. The first stablecoin, BitUSD, became a success and found a way to provide a sense of stability to the industry. 

Generally, stablecoins are pegged by a stable fiat currency like USD and Euro. In addition, founding organizations must maintain a 1:1 ratio between digital and fiat currency. The success of BitUSD led to the development of numerous stablecoins over the years. 

At its core, his concept actualized the best qualities of the DeFi and the Banking system. It provided the security, transaction speed, and anonymity common to standard crypto coins. Although, it also provides the stability of fiat currencies. In the past few months, the transaction volume of stablecoins has grown significantly, showcasing the benefits of its practical use.

Société Générale Introduces new stablecoin

By providing the best qualities of Banking and DeFi systems, stablecoins have acted as an intermediary between both worlds. Its stable nature has encouraged many banks to offer crypto payment services that accept stablecoin, bringing the vision of Web3 a bit closer. In recent developments, Société Générale, the third largest bank in France, has officially announced the release of EUR CoinVertible. the first euro-pegged stablecoins. 

Many banks and global financial organizations have recently taken active steps to accommodate blockchain technology into their systems. This inspired many banks to follow suit to avoid missing out on the ongoing industrial revolutions. Société Générale is no different, as the French bank had publicly announced its intent to enter the crypto sphere. 

According to the announcement, the EUR CoinVertible stablecoin will debut on the Luxembourge-based Bitstamp crypto exchange. The euro will fully back the stablecoin, allowing bank customers to interact with the growing digital market.

Jean-Marc Stenger, CEO of Société Générale, has claimed that the asset will be available to its broad user base, and traders can also interact with the stablecoins. This new launch highlights the bank’s role in the evolving crypto domain, emphasizing the necessity of a stablecoin denominated in euros.

In addition, the CEO also highlighted how the new stablecoins would focus mainly on their usage in settling trade involving digital bonds, funds, and various assets. In addition, the EUR CoinVertible will extend beyond Société Générale’s platform in hopes of dominating France’s stablecoin market.

Also, Read PayPal launches its stablecoin, Paypal USD, pegged to the dollar.

Despite this new milestone, Société Générale is not a newcomer in the crypto industry. France’s third-largest bank has avidly supported cryptocurrency for several years. In July, the bank’s crypto subsidiary, Forge, became the first crypto exchange to obtain France’s crypto license. This milestone allowed Forge to offer crypto custody and Trading and sales services. Furthermore, the launch of EURCV comes at a critical time, and the European Union has embarked on a journey to regulate its crypto ecosystems. 

According to the EU, the upcoming Markets in Crypto-Assets Regulation has been approved and is expected to take effect in 2024. The MiCA regulation stipulates several restrictions on stablecoins as their influence grows. According to Société Générale and the EU, stablecoins have the potential to significantly change and shape the regulatory landscape, establishing a new digital future for Europe.

The true potential of Stablecoins

At the beginning of 2023, the entirety of the Web3 industry received significant blows from regulatory bodies and disheartened crypto traders. Our reputation was in the mud after the FTX fiasco, as many went as far as questioning the legitimacy of blockchain technology. 

Fortunately, the entire digital asset domain turned positive after six consecutive months of negative net supply. According to Binance, the top fixed stablecoins have recorded a positive net surplus of $3.8 billion in Q4 2023. The report states, “Given that increasing stablecoin supply is a measure of capital inflows into crypto and an indication of potential buying pressure, the recent move can be evaluated as a positive sign.”

Also, Read China’s UDPN targets to set up a Stablecoins-CBDC bridge.

Several actors have played a vital role in the recent rise of stablecoins. Among them are the new developments around blockchain security. Recently, Zero-knowledge technology has improved the security measures and the reputation of most blockchain platforms.

In addition, the inflation rate around several fiat currencies has resulted in many turning to stablecoins for reassurance and profit. In 2022, according to Ernst & Young, Argentina, Iran, Lebanon, South Sudan, Sudan, Suriname, Turkey, Venezuela, Yemen, and Zimbabwe were all experiencing hyperinflation.

Furthermore, the inherent volatility in crypto coins led many individuals to find stablecoins that provide fewer financial risks. Since it also requires fiat currency to maintain its value, most regulatory bodies have found it easier to generate a framework around its use. 

For instance, the US Federal Reserve publicly announced on August 2023 that its region’s bank could transact in stablecoins. Furthermore, the US Fed said it would create a new supervisory program to oversee the activities of banks aiming to launch crypto-payment services.

Currently, the launch of EURCV is one among many intended stables. DeFI-base systems are becoming more mainstream, given the rise of Fintech startups. Today, many banks have actively provided similar services or introduced stablecoins to ensure business continuity.

As Société Générale pioneers this trend in France, it is a testament to the changing tides amid the financial sector.

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• Source: https://web3africa.news/2023/12/14/news/societe-generale-eur-coinvertible/