French multinational financial services company, Societe Generale, recently announced the launch of its Euro-denominated digital asset, EUR CoinVertible, through its crypto subsidiary, SG-FORGE.
Billed as the “first institutional stablecoin deployed on a public blockchain,” EUR CoinVertible will run via a smart contract on Ethereum, and its source code will be published under the Apache 2.0 open-source license.
The stablecoin is designed to bridge the gap between traditional capital markets and the digital asset ecosystem and will complement SG-FORGE’s existing offerings for institutional clients.
In particular, it will address what are described as “growing client needs” for: an on-chain settlement asset, an innovative corporate treasury and cash management solution, on-chain liquidity and refinancing, and intra-day liquidity for margin calls.
EUR CoinVertible will be backed by a segregated pool of collateral assets, which will be strictly controlled in terms of their liquidity and minimum rating. There will be daily transparency on the issued market cap and the value and composition of the collateral, and token holders will have direct access to the underlying collateral assets.
SG-FORGE Chief Executive Officer, Jean-Marc Stenger explained that stablecoins created under a “robust banking-grade structure” would be key to increasing trust in the native crypto-ecosystem, adding:
“This issuance is a major step in Societe Generale–FORGE’s roadmap to deliver innovative solutions to its clients, either real-money institutions and corporates or entities of the crypto industry, and to facilitate the emergence of new market infrastructures based on blockchain technology.”
The token is designed in accordance with the French legal framework for digital assets and is based on the CAST (compliant architecture for security tokens) standard, to ensure interoperability with legacy systems and financial practices.
A request to assign EUR CoinVertible a credit rating has already been made to a leading agency, and SG-FORGE plans to work with reputable crypto exchanges and trusted third-party platforms to have the stablecoin listed in the next few months.
One important thing to note is that access to the token will be limited to investors who have already been onboarded by Societe Generale Group via its existing KYC and AML procedures. This will be enforced by limiting transactions of EUR CoinVertible to white-listed Ethereum addresses.
While this may prevent a wider uptake of the token in the crypto ecosystem, SG-FORGE believes that this is essential to provide a safe environment for its clients, and notes that it also provides an additional layer of security against theft.
EUR CoinVertible is just the latest in an increasingly long line of stablecoin proposals by European banks designed as an attempt to retain customers. In contrast with some of the alternatives, Societe Generale is purely providing a service for its existing customers, with no desire to see more widespread usage.
While this may be an appealing proposition for its intended user base, linking Ethereum addresses to KYC/AML data would appear to be just asking for a leak/hack to put customers’ entire blockchain history into the public domain.
Still, at least European banks continue to develop products in the blockchain space, rather than, you know, just hoping the entire industry will be regulated out of existence.
We, as always, shall continue to Observe with interest.
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