Does the world need Euro Coin? There are already stablecoins pegged to the Euro in the market. The difference here, however, is Circle. As the issuer of the well-regarded USDC, they have the reputation, the know-how, and the clientele to make this happen. Even with all of those advantages, itโs the market that will decide if the world needs Euro Coin.
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On the projectโs page, they describe it as, โEuro Coin (EUROC) is issued by Circle under the same full-reserve model as USD Coin (USDC), a trusted dollar digital currency with more than $54 billion in circulation.โ At first, Euro Coin will exist on the Ethereum blockchain, itโll be a traditional ERC-20 already compatible with everything out there.
1/ CIRCLE LAUNCHES EURO COIN: Today, we announced our 2nd major fiat-backed stablecoin, Euro Coin, which went live on Ethereum mainnet, and will be available to mint and redeem on June 30th. https://t.co/vPZkItL0Fu
โ Jeremy Allaire (@jerallaire) June 16, 2022
The Euro Coin will be โ100% backed by euros held in euro-denominated banking accounts so that itโs always redeemable 1:1 for eurosโ. The difference with regular euros is that EUROC will be โavailable 24/7 and moves at internet speedโ. The new stablecoin debuts on June 30th. โBusinesses can mint Euro Coin straight from the source by depositing euros into their Circle Account using Silvergateโs Euro SEN network.โ
Whatโs Euro Coin โs Main Use?
In a recent tweet, Circle CEO Jeremy Allaire summarized the productโs value proposition. โLike USDC, Euro Coin is being issued under a regulated framework for money transmission, under the same statutes that regulate USDC, with full-reserves in Euro, with the same security, liquidity and transparency that the market has come to expect from Circleโ. Does it solve a problem, though? Two words: foreign exchange.
4/ Euro Coin expands opportunities for payments, on-chain FX, trade finance, commerce and broader digital asset markets use-cases. The launch is symbolic of a shift in crypto markets towards greater and greater utility value from blockchain infrastructure.
โ Jeremy Allaire (@jerallaire) June 16, 2022
Back to the projectโs page, Circle promises โmulti-currency digital banking and near-instant foreign exchange, where daily volume in traditional markets can top $6.6 trillion globally.โ As we read a while ago in the Bitcoinist Book Club, โThe Bitcoin Standardโ explains how that huge market emerges just to solve โthe age-old problem of lack of coincidence of wants.โ As explained by Saifedean Ammous, the process goes like this:
โThe seller does not want the currency held by the buyer, and so the buyer must purchase another currency first, and incur conversion costs. As advances in transportation and telecommunications continue to increase global economic integration, the cost of these inefficiencies just keeps getting bigger. The market for foreign exchange, at $5 trillion of daily volume, exists purely as a result of this inefficiency of the absence of a single global homogeneous international currency.โ
As Circleโs numbers show, since the bookโs publication the foreign exchange market kept growing. And since weโre far from living in a bitcoin standard, with a โsingle global homogeneous international currency,โ the foreign exchange will keep growing. And thatโs where Euro Coin comes in.ย
ETH price chart for 06/16/2022 on Kraken | Source: ETH/USD on TradingView.com
The New Stablecoinโs Characteristics
- Where will the money that backs the operation be? โCircle will hold euros in euro-denominated banking accounts at leading financial institutions, beginning with Silvergate Bank in the U.S.โ
Related Reading | Crypto Company Circle Seeks To Become Global Digital Currency Bank
- โBusinesses can use a free Circle Account to mint and redeem Euro Coin at no additional costโ. Circle can afford to treat businesses like that because theyโre that big and established.ย
- Circle will audit the Euro Coin. โGrant Thornton LLP will be issuing monthly attestations of Euro Coin reserves, starting with an attestation for the month of July 2022. Circle will publish the attestation reports on this webpage, with Julyโs report being available to view online by the end of August 2022.โ
Itโs also worth noting that the main criticism the project received was because they choose Ethereum to start with. However, Circle promises the Euro Coin in other blockchains soon. And considering that USDC exists in every smart contract-enabled blockchain under the sun, thereโs no reason not to believe them.
Featured Image: Screenshot from Circle's website | Charts by TradingView
