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Stablecoins are a type of cryptocurrency offering investors price stability. The most popular stablecoins are those backed by the United States dollar \u2014 the world\u2019s leading reserve currency. Others are less popular and not widely used, so many may not have heard of alternatives if they haven\u2019t searched for them.<\/p>\n
According<\/a> to data from the International Monetary Fund, the euro is the world\u2019s second most widely held reserve currency, behind the U.S. dollar and ahead of the Chinese yuan. The euro is the official currency of the eurozone, comprising 20 of 27 member states of the European Union (EU), with over 300 million people using it as their base currency.<\/p>\n In the cryptocurrency space, the euro is widely adopted by cryptocurrency trading platforms serving users in EU countries. Yet when it comes to stablecoins<\/a>, euro-backed options are not as popular, with the most prominent ones offered by leading stablecoin providers.<\/p>\n The world\u2019s largest stablecoin issuers, Tether and Circle, have euro-backed stablecoins in circulation. Euro Tether (EURT) has over 200 million tokens in circulation but is dwarfed by the U.S. dollar-backed Tether (USDT), with 70.9 billion circulating tokens.<\/p>\n Similarly, Circle\u2019s Euro Coin (EUROC) has nearly 32 million circulating tokens, while its U.S. dollar-backed stablecoin USD Coin (USDC<\/a>) has a circulating supply of over 42 billion. Cointelegraph reached out to Circle for comment on these figures. The company highlighted EUROC\u2019s growing adoption, with the Nasdaq-listed cryptocurrency exchange Coinbase recently announcing its listing.<\/p>\n Coinbase will add support for Euro Coin (EUROC) on the Ethereum network (ERC-20 token). Do not send this asset over other networks or your funds may be lost. Inbound transfers for this asset are available on @Coinbase<\/a> & @CoinbaseExch<\/a> in the regions where trading is supported.<\/p>\n \u2014 Coinbase Assets (@CoinbaseAssets) February 21, 2023<\/a><\/p><\/blockquote>\n EUROC is less than one year old, launching in June 2022<\/a>. USDC, on the other hand, was launched in 2018 by the Centre Consortium, of which both Circle and Coinbase are founding members.<\/p>\n Speaking to Cointelegraph, Danny Talwar, head of tax at crypto tax calculator Koinly, said that a widely adopted euro stablecoin would be \u201cabsolutely\u201d beneficial for cryptocurrency markets, as it could \u201callow for faster on-ramps and off-ramps to and from exchanges and DeFi protocols.\u201d<\/p>\n Recent:\u00a0Could NFTs and crypto help Japan\u2019s \u2018Cool Japan\u2019 strategy?<\/a><\/em><\/strong><\/p>\n Nevertheless, when looking at the circulating supply of U.S. dollar and euro-backed stablecoins, Talwar said that \u201cdemand globally remains for U.S.-dollar-denominated stablecoins, with the euro experiencing heightened volatility over the past 12 months.\u201d<\/p>\n The recent rise in interest rates has sparked concerns over the ability of some eurozone economies to withstand their impact. The European Central Bank has already raised its rate to 2.5%, which remains significantly lower than the current federal funds rate of 4.50% to 4.75% in the United States.<\/p>\n While rising interest rates pose significant risks, they also bring in new opportunities, especially for those with cash lying around. Stablecoin issuers like Tether and Circle back circulating tokens with equivalent reserves, allowing them to benefit from higher rates. While the interest is there, stablecoins only grow if user demand exists.<\/p>\n Speaking to Cointelegraph, a Tether spokesperson noted that a widely adopted euro stablecoin could be positive for the cryptocurrency space, as it \u201cprovides a faster, less costly option for asset transfer to anyone with a cryptocurrency wallet.\u201d For Tether, it could \u201crepresent another step forward n the journey toward increased financial access.\u201d The spokesperson added:<\/p>\n \u201cStablecoins demonstrate more and more their usefulness as a store of value, as they provide more stability, a form of remittance, a hedge against central bank policymakers who seek to influence their domestic currencies, and a much cheaper form of accessing financial services.\u201d<\/p><\/blockquote>\n Such a stablecoin, the spokesperson said, would reinforce the euro, the same way USDT reinforces the U.S. dollar as one of the most \u201cdominant currencies across the globe.\u201d While introducing an \u201copportunity for many markets, as it also acts as an on-ramp to the decentralized finance ecosystem.\u201d<\/p>\n They said Tether is more interested in introducing a stablecoin backed by the euro to emerging markets instead of European markets. This is because the firm believes people in emerging markets have a greater demand for stablecoins backed by stable fiat currencies. These stablecoins can help people \u201cprotect themselves from high devaluation of their national currency.\u201d<\/p>\n A stablecoin\u2019s usefulness as a store of value, for remittances, and as a hedge against currency devaluation could help it increase financial access for people worldwide and boost demand for it.<\/p>\n As users buy more of a stablecoin, its reserves swell, and the company managing it can bring in more cash through treasuries and other cash equivalents.<\/p>\n Demand for a stablecoin backed by the euro and representing a blockchain-based version of the eurozone currency makes sense. Speaking to Cointelegraph, Lucas Kiely, chief information officer of Yield App, said that most stablecoins are currently denominated in dollars. However, \u201cfor those who want to hold their euros on-chain without taking on the EUR\/USD currency risk, a euro stablecoin provides that capability.\u201d<\/p>\n According to Kiely, there\u2019s no reason a euro-denominated stablecoin shouldn\u2019t compete with U.S. dollar-denominated stablecoins, given the euro\u2019s status as a global reserve currency. He said that euro-backed stablecoins \u201cneed to have greater adoption before they become more prevalent,\u201d adding:<\/p>\n \u201dUltimately, it boils down to whether people want to hold the euro natively or speculate on EUR\/USD prices, and whether regulators are willing to accept third-party euro coin issuance.\u201d<\/p><\/blockquote>\n He added that the Markets in Crypto-Assets (MiCA) regulation, set to be voted on by the European Parliament in April, will significantly impact the future of stablecoin development.<\/p>\n The outcome of the vote on MiCA will determine the regulatory requirements and framework for stablecoin issuers operating in the European Union, with potentially far-reaching implications in the broader cryptocurrency market.<\/p>\n Kiely said that regulators have adopted a \u201clight touch to crypto regulation,\u201d allowing innovation to thrive, but increased regulation \u201cdoesn\u2019t need to spell doom and gloom.\u201d<\/p>\n Tether\u2019s spokesperson told Cointelegraph that MiCA will bring \u201cheavy circulation restrictions on non-euro denominated stablecoins in Europe used as a means of exchange in this way,\u201d adding that the stablecoin issuer is looking forward \u201cto continuing to work with regulators to cement the existence of digital currencies and stablecoin as a staple of economic freedom and innovation.\u201d<\/p>\nLeading euro-backed stablecoins fall behind<\/h2>\n
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Would a popular euro stablecoin be positive for crypto?<\/h2>\n
Demand for a euro stablecoin<\/h2>\n
Regulations matter<\/h2>\n