Circle Internet Financial Ltd announced that next June 30 it will launch its project called Euro Coin, or EUROC, the first stablecoin backed by the euro and aimed at institutional investors.
Circle is the same company as USD Coin (USDC), the second largest stablecoin in the industry.
In this sense, Euro Coin will be a fully regulated cryptocurrency and pegged to the euro in a one-to-one ratio, but it will also follow the “full reserve model”.
One point to take into consideration is that the EUROC coins in circulation will be backed by an equivalent of euro-denominated reserves. So any increase in the supply of the cryptocurrency in circulation will require an equivalent increase in its reserves and these will be held by US-regulated financial institutions such as Silvergate Bank.
Another aspect to be considered by investors is that fully reserved stablecoins are a safer financial operation than algorithmic stablecoins, as some of these have collapsed.
In this regard, Jeremy Allaire, CEO of Circle, recently stated that providing investors with certainty requires that their trades have some sort of backing.
“We have always believed that there was a need for a regulatory framework around stablecoins. That’s why, when we launched USDC 4 years ago, we launched it under the regulatory framework, both federal and state, that ensured consumer protection, that there would always be a 100% reserve,” he said.
Alternative for payments and exchanges
To boot, the Euro Coin will appear as an ERC-20 token powered by the Ethereum blockchain and will be used to make payments, exchanges and DeFi activities such as lending and borrowing.
Although the EUROC project had already been in the works for several months, its launch comes at a somewhat unfortunate period after USDC suffered massive losses in mid-May and this had a negative impact on investor acceptance.