The Euro Coin (EUROC), the euro-backed stablecoin issued by Circle

  1. What is the Euro Coin (EUROC)?
  2. What is EUROC for?
  3. How does the Euro Coin work?
  4. How to buy EUROC tokens?
  5. Our opinion on the Euro Coin

What is the Euro Coin (EUROC)?

L’Euro Coin (EUROC) is a stablecoin announced on June 16, 2022 by Circlethe issuing company of the famous USD Coin (USDC).

The latter is a well-known stablecoin in the industry and boasts a valuation of no less than $55 billion at the time of this writing, ranking as second of the most valuable stablecoins on the market.

Circle already benefits from a strong credibility with investors since USDC is a very popular stablecoin and the biggest rival of Tether USD (USDT). The USDC reserves are fully transparentand this one has proven itself over the years, establishing itself as a solid alternative for cryptocurrencies of this type.

Circle CEO Jeremy Allaire writes of this:

“Like the USDC, the Euro Coin is issued under a regulated framework for the transmission of money, under the same statutes that regulate the USDC, with reserves in euros, with the same security, liquidity and transparency as the market expects from Circle. »

The EUROC is therefore a stablecoin following the course of the euro (EUR) and benefits from the same quality guarantees as the USDC. It is a stablecoin centralized and the value of its tokens is totally collateralized by euros held in US bank accounts denominated in euros.

More concretely, this means that for 1 EUROC token issued, there is 1 euro in the reserves of the issuing company, Circle. This is a ratio of 1 to 1. EUROC tokens are the debts and euros are the assets.

The Euro Coin officially sees the light of day on June 30, 2022 on the Ethereum blockchain, with the support of major exchange platforms like Binance.US, Bitstamp, Huobi Global and FTX, a direct support Uniswap, Curve or Compound protocols, as well as MetaMask and Ledger wallets.

The combination of USDC and EUROC opens up new possibilities for digital banking as these two stablecoins can be traded very quicklyproviding their users with an efficient way to switch between them.

Circle thus takes a first step towards a stablecoins exchange market by issuing the Euro Coin, the euro being the second most traded currency in the world after the US dollar.

Euro stablecoins are still few in number and none have really been massively adopted.

There is for example theEuro Tether (EURT) but it does not have much support outside of Bitfinex, whose CEO also runs Tether Holding Limited.

Other existing euro stablecoins are experiencing a similar lack of adoptionso there is an opportunity for the Euro Coin to seize if institutional and investor confidence follows.

Euro Coin (EUROC) Logo, by Cryptoast

👉 To go further – Stablecoin, all about this type of cryptocurrency

What is EUROC for?

EUROC has the same utility as other stablecoins, except that it follows the course of the euro, something still quite rare in the cryptocurrency industry.

Indeed, the vast majority of stablecoins available follow the price of the dollar as illustrated in the figure above, none of the top 10 stablecoins are euro stablecoins.

Overview of the 10 most valuable stablecoins on the market

Figure 1: Overview of the 10 most valuable stablecoins on the market (June 2022)

Thus, it is possible to use the EUROC to protect yourself from the volatility of the cryptocurrency market and avoid significant fluctuations in the value of its portfolio, particularly when the market experiences turbulence.

Logically, the Euro Coin also allows to send funds in euro denomination at low cost, very quickly, from anywhere, without the need for a bank account, regardless of the amount of the transaction. It only takes one Internet connection.

Decentralized finance (DeFi) will likely be a big part of EUROC usage as well, similar to USDC’s success in DeFi with staking, yield farming, and lending.

How does the Euro Coin work?

The EURO is 100% backed by euro reserves of the Circle company. silver gatea bank based in San Diego in the United States, takes care of maintain reserves in euros on behalf of the company for the moment.

The circulating supply of this token is therefore equal to the reserve in euros with a ratio of 1 to 1. Indeed, each EUROC token can not only be exchanged for 1 euro on exchanges, but also straight from the source by depositing euros into their Circle account, then using Silvergate’s Euro SEN.

It is a network that allows mint of new EUROC tokens by depositing the equivalent in euros, which will be sent to the reserve. Conversely, it is possible to deposit EUROC tokens there which will be burned for recover the equivalent in euros, all almost instantaneously. This mechanism ensures that the outstanding supply of EUROC and the euro reserve are always equivalent.

In terms of transparency, the reserves guaranteeing the Euro Coin should benefit, like the USD Coin, from a monthly certificate drawn up by the auditing firm Grant Thornton LLC.

This certificate indicates the amount of EUROC tokens in circulation as well as the amount of the value of the assets denominated in euros held by Circle. This latter amount must, in principle, be equivalent to or greater than that of the EUROC tokens in circulation.

In addition, Circle’s annual accountswhich include reserves in euros, are audited annually and filed with the Securities and Exchange Commission (SEC), the US federal financial market regulator.

Finally, the interest rate risk on the euro reserves is fully assumed by Circle. For example, if the European Central Bank (ECB) raises its key rate, the value of European bonds will decrease accordingly and Circle will have to cover this difference if it holds bonds in its reserve.

Finally, it should be noted that Circle has so far always managed to maintain its reserves for its flagship stablecoin, the USDC.

How to buy EUROC tokens?

It is not yet possible, at the time of writing, to obtain EUROC tokens. From June 30, 2022at the official launch of this stablecoin, it will be possible to buy it on Bitstamp, FTX, Huobi Global or Binance.US. In terms of decentralized finance, the EUROC will notably be available on Uniswap.

Explanations for buying EUROC on FTX

  1. Register on FTX;
  2. You will receive an email and need to click on a link to verify your account;
  3. Deposit funds on the platform;
  4. Click on menu Market and search for the pair EUROC/USDT ;
  5. All you have to do is buy EUROC for the amount of your choice;
  6. Congratulations 🎉 You are now in possession of EUROC tokens!

👉 For more detailed explanations, see our FTX exchange tutorial

Our opinion on the Euro Coin

Capitalizing on the credibility Circle has built over the years with the USDC, this new stablecoin already enjoys a big spotlight. The company thus strikes a blow with the Euro Coin.

This is a legitimate exposure since the company has always been in compliance with US financial regulators, transparent with its reserves audited monthly by the firm Grant Thornton. Ultimately, USDC’s huge valuation attests to its clout in the industry.

We can also observe that there is, at the time of writing these lines, no euro stablecoin that has genuinely shown great potential for adoption. The Euro Coin has the opportunity to take advantage of this opportunity to rise to the top and rub shoulders with the largest stablecoins backed by the US dollar.

However, you will have noticed that the Euro Coin is only listed on Binance.US and not on the global Binance platform, since this stablecoin is initially deployed in the United States.

An intriguing choice for a euro-backed stablecoin, but one that makes sense since European authorities struggle to agree on fair regulation of digital assets on European soil.

Indeed, the European MiCA regulation notably includes stablecoins, which raise strong concerns for the monetary policy, stability and sovereignty of the European Union. The European Union therefore does not offer, at the time of writing, a favorable environment for the international development of a euro stablecoin.

Whatever, the Euro Coin enjoys a lot of support from its launch and it will be interesting to observe its evolution and level of adoption over time. Will it really be used by industry players, most of whom are used to using stablecoins backed by the US dollar?

To go further, our journalist Valentin Demé was able to discuss with Alexandre Stervinou, Deputy Director Infrastructures, Innovations and Payments of the Bank of France.

This video deals with the perception of Europe on the launch of the EUROC by an American company, the ecosystem of cryptocurrencies in general but also the central bank digital currencies (MNBC).

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Sources – Figure 1: Coingecko

What is your opinion on Euro Coin (EUROC)?

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About the Author : Jessy Aouali

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Master student in International Finance, I have been interested in cryptocurrencies since June 2017 and more particularly in fintech and decentralized finance. I aspire to make my contributions interesting for readers of all levels.
All articles by Jessy Aouali.

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