Euro Coin (EUROC), Euro-backed stablecoin from Circle, out this month

A new stablecoin is coming to town, EUROC. EUROC is backed 1:1 by the Euro. Although backed by the currency of the European Union, EUROC is from the US: Circle. Now let’s circle back on how this started.

Circle, issuer of the USD Coin (USDC) stablecoin, announced last Thursday, the launch of a new stablecoin backed by the Euro (£) by the end of June 2022. According to the announcement, the Euro Coin (EUROC) will be issued under the same full-reserve model as the USDC. 

The EUROC token will be available only on the Ethereum (ERC-20) blockchain, at the time of its launch. Other exchanges, including Binance US, will add it on their platforms later this year. It will be made available as a trading pair with other cryptocurrencies. Institutional traders, businesses, and individuals can also be able to acquire, hold, use, and exchange the EUROC.

Circle’s CEO, Jeremy Allaire said that the company’s new product is a response to users’ demand for a Euro-backed cryptocurrency.

The announcement also disclosed that the regulated stablecoin is fully backed by reserve assets in Silvergate Bank, Anchorage Digital, CYBAVO, and Fireblocks, all these, being American financial institutions. 

Although similar to the USDC, there is seemingly one major difference between EUROC and USDC: EUROC stablecoin will be backed 100% by Euro currency (£). USDC, however, is backed by cash and short-term US government bonds [as collateral]. This means that a reserve in Euros is held in custody—subject to US regulatory oversight—for each EUROC token in use.

The EUROC is not the first Euro-backed stablecoin. Other existing stablecoins backed by the Euro include EURt issued by Tether, and Stasis Euro (EURS) issued by Malta-based Stasis.  Although both EURt and EURS are not anywhere as popular in the crypto market as USDT and Circle’s own USDC.

 

What will likely be the fate of the EUROC? 

Recently, amidst the all-time lows in the crypto market, the most popular stablecoins backed by the US Dollar have also had their downsides. In May, the algorithmic stablecoin TerraUSD (UST) declined symmetrically against the US Dollar. Tether (USDT) also fell below the Dollar, following months of fears and concerns about how USDT is not backed 1:1 by the USD as claimed. Circle’s dollar-backed stablecoin, however, remained “stable”.

At the time of writing this report, USDC current CoinMarketCap ranking is #4, with a market cap of $55.4 billion. Given this analysis, can the crypto asset buyer be assured of the stability of the EUROC also? Until then, we can only wait and see how the new stablecoin will perform in the market. 

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