Cryptocurrency firm Circle announced on June 16 that it would be issuing Euro Coin EUROC/USD.
What Happened: As revealed to CoinDesk, USD Coin USDC/USD issuing company Circle would be launching Euro Coin. The stablecoin is to be collateralized with reserves in Euro denomination, constituting Euro government debt and cash.
This news follows European Union regulators announcing that they would be structuring formal policies and regulations to oversee the issuing of stablecoins. Finalizing these regulations is to be implemented by the end of June.
Euro Coin will launch June 30 upon the Ethereum ETH/USD blockchain. The Euro SEN (Silvergate Exchange Network) will be facilitating access to Euro Coin. Thus, users of the token must have a banking history with the network. Circle further stated that the stablecoin will be within the regulatory outlines of the U.S. legal framework.
Why Its Important: There is major fear surrounding the legitimacy of stablecoins, following the recent plunge in the cryptocurrency market and the de-peg of Terra’s LUNA/USD stablecoin UST UST/USD.
Possessing collateralized reserves is an urgent need for new issuers of stablecoins. Backing the Euro Coin with cash and government debt reserves provides the token to have a more secure structure, as compared to algorithmic stablecoins, such as UST.
The Euro Coin is issued in addition to the pre-existing euro-based stablecoins Euro Tether (CRYPTO: EURt) and Stasis Euro EURS/USD.
Numerous stablecoins that first launched on Ethereum found their way to layer-2 scaling solutions such as the Polygon MATIC/USD network. Given that stablecoins are frequently used as a means of purchase, the Ethereum mainnet poses the disadvantage of being costly, given the significant gas fees. Thus, numerous pre-existing stablecoins have scaled via L2s.
Euro Coin’s sister stablecoin USDC was scaled via the Polygon network, becoming the network’s biggest stablecoin with a total value locked (TVL) of $59,819,040. As Circle launches Euro Coin, for the stablecoin to effectively scale and be used as an effective means of transaction, it may have to follow its predecessors and expand to layer-2 scaling solutions, such as the Polygon network.
Photo: NicoElNino via Shutterstock