Société Generale-FORGE (SG-FORGE), the digital asset arm of the French bank of the same name, said on Friday it will expand its euro-backed stablecoin to the Solana blockchain, aiming to increase adoption and tap into decentralized finance markets.

First launched on Ethereum in April 2023, the EUR CoinVertible (EURCV) stablecoin has seen limited uptake with a market capitalization of €33 million ($35.3 million) across 28 holders, according to CoinGecko data.

Jean-Marc Stenger, CEO of SG-FORGE, said the move would "unlock new possibilities for both retail users and institutional players in DeFi," citing Solana's high-speed network as complementary to the stablecoin's features.

The expansion follows SG-FORGE's efforts to enhance EURCV's regulatory compliance. On July 1, the company restructured the stablecoin as an Electronic-Money Token to align with the European Union's Markets in Crypto-assets (MiCA) regulation, allowing for free transferability without whitelisting restrictions.

SG-FORGE also secured electronic money institution approval from the French Prudential Supervision and Resolution Authority (ACPR), adding to its July 2023 license as a Digital Asset Service Provider (DASP) from the AMF, the French market regulator.

Despite these efforts, blockchain data shows that 97% of EURCV's balance remains concentrated in only four wallets. Two of these wallets hold €20 million and were created just two months ago with no signs of subsequent activity.

To improve liquidity, SG-FORGE partnered with market makers Flowdesk and Wintermute, and listed EURCV on the Bitstamp exchange. The company's move to Solana mirrors recent trends, following PayPal's PYUSD stablecoin expansion, which doubled its market capitalization after launching on Solana three months prior. However, PayPal's approach to incentivizing PYUSD holders with high interest rates and yields has raised concerns. While initially effective in boosting interest and adoption, this system is not sustainable in the long term. As interest rates fluctuate, maintaining high rewards becomes increasingly difficult. Furthermore, offering interest on a stablecoin may discourage spending, as holders are more likely to store the stablecoin rather than use it, reducing its circulation—an issue less prominent with 'bad' money, which circulates more freely.

SG-FORGE has been at the forefront of institutional blockchain adoption, having facilitated the European Investment Bank's first digital bond issuance on Ethereum in 2021 and developed the CAST tokenization framework. The company also engaged with the MakerDAO stablecoin protocol in January 2023, borrowing millions while providing digitally covered bond collateral.

Stenger emphasized that "robust and regulated stablecoins are essential for the proper functioning, security, and institutionalization of crypto-asset markets."

As institutional interest in regulated digital assets grows, we will continue to observe as SG-FORGE's latest expansion represents another step in bridging traditional finance with decentralized finance ecosystems.

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