Jun 16, 2022 - Economy & Business

Circle to test growing stablecoin dominance

Illustration of the zero on a euro bill replaced with the logo for Circle Internet Financial.
Illustration: Maura Losch/Axios

Circle Internet Financial, the issuer behind the second-largest stablecoin pegged to the U.S. dollar, is aiming for stablecoin dominance with a second offering — one pegged to the euro.

Why it matters: Circle's USDC dollar coin has a near $60 billion market capitalization and is rapidly closing in on Tether's USDT. Now, Circle is launching Euro Coin (EUROC), which like USDC, will be backed by full reserves, the firm said.

Situational awareness: The euro-pegged stablecoin market is small compared to USD stablecoins'.

  • Total circulation of euro-denominated stablecoins is just $129 million as of June 16, according to data compiled by CoinMarketCap.com, compared to $156 billion in dollar-denominated stablecoins.
  • For example, Euro Tether's market capitalization is just under $220 million, dwarfed by USDT's $70 billion.

Driving the news: Circle on Thursday said it would launch Euro Coin as an ERC-20 standard token on the Ethereum blockchain on June 30.

Details: Exchanges like Binance US, Bitstamp, FTX and Huobi Global will support the coin, as well as DeFi players Compound, Curve, DFX and Uniswap.

  • Custodians include Anchorage Digital and Fireblocks.
  • Reserves will be held at U.S.-regulated institutions like Silvergate Bank, a unit of Silvergate Capital.
  • "Euro Coin expands opportunities for payments, on-chain FX, trade finance, commerce and broader digital asset markets use-cases," Jared Favole, senior director of communications and policy at Circle, tells Axios.

Flashback: Circle is set to merge with blank-check company Concord Acquisition Corp. in a re-cut deal valuing the company at $9 billion.

  • In early June, Concord extended its deadline to close the deal by 6 months, from June 10 to December 10, according to a filing.
  • Post-merger Circle will trade under the symbol "CRCL."

What they're saying: "We must have a choice against just dollar stablecoins. As good as they are, dollar stablecoins are dependent on the dollar ecosystem," Keld van Schreven, cofounder and managing director of leading London-based crypto investment public company KR1, tells Axios.

  • "We need euro pairs with btc, ether, dot, atoms, sol, and other major crypto. A euro stablecoin will expand the whole crypto ecosystem and bring in a huge amount of liquidity."

Meanwhile:

  • Regulators and lawmakers in Europe are poised to set up rules for stablecoin issuers. The Markets in Crypto Assets, or MiCA, legislation is poised to be finalized, setting common rules for 27 member states.
  • Businesses can start minting Circle's Euro Coin by depositing euros into their Circle Account using Silvergate's Euro Sen Network.

What's next: Euro Coin will eventually launch on other blockchains, according to Circle.

  • Also, additional deposit options are expected later this year.

Our thought bubble: The market has not shown a burning desire for euro-backed stablecoins... yet.

Additional reporting by Brady Dale.

Editor's note: This story has been updated to include comments on the benefits of a euro stablecoin from KR1's Keld van Schreven.

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