Blockworks

The European Central Bank (ECB) has chosen technology providers to deliver core services for a potential digital euro.



In a notice <a href="https://www.ecb.europa.eu/press/intro/news/html/ecb.mipnews251002.en.html">published</a> on October 2, the ECB said it had signed framework agreements with firms responsible for alias lookup, fraud and risk management, app development, offline payments, and secure exchange of payment information. Service requests will first go to the primary provider in each category, with a second vendor available if needed.



Among the selected companies are Feedzai and Capgemini Deutschland for fraud management, Almaviva and Fabrick for app and software development, and Giesecke+Devrient for offline payment solutions. EquensWorldline and Senacor FCS were chosen for secure information exchange, while Sapient GmbH and Tremend Software Consulting are included in multiple categories.&nbsp;



One additional provider for offline services will be announced later, according to the note.



The ECB stressed that the agreements involve no payments at this stage and include safeguards to adapt scope in line with European Union legislation. A decision to issue a digital euro will only follow adoption of the Digital Euro Regulation, which remains under debate. Development of specific components will depend on future approval from the ECB Governing Council.



The initiative reflects the EU’s ongoing effort to create a central bank digital currency (CBDC) that could coexist with cash, improve payment efficiency, and reduce reliance on private stablecoins. Even if ultimately adopted, however, a digital euro may not be launched until the end of the decade.



This is a developing story.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Banking

ECB picks providers for digital euro components

Nine European banks, including ING, UniCredit, CaixaBank and Danske Bank, said on Thursday that they have formed a consortium to launch a euro-denominated stablecoin.



The initiative, <a href="https://www.reuters.com/business/finance/big-european-banks-form-company-launch-stablecoin-2025-09-25/">structured</a> as a new company in Amsterdam, aims to issue its first tokens in the second half of 2026 under supervision from the Dutch Central Bank and in compliance with the European Union’s Markets in Crypto Assets (MiCA) regulation.



The move comes as US financial institutions, buoyed by recent federal legislation on stablecoins, prepare to roll out their own dollar-backed tokens, intensifying concerns over US dominance in global digital payments.



Euro-denominated stablecoins remain marginal, with less than €1 billion in circulation compared to roughly $300 billion in dollar-linked tokens, according to the Bank of Italy. The newly announced plan echoes earlier attempts, <a href="https://fr.cointelegraph.com/news/france-s-third-largest-bank-societe-generale-launches-euro-pegged-stablecoin">including</a> Société Générale’s 2023 euro stablecoin launch, which saw limited uptake.



European Central Bank President Christine Lagarde has repeatedly warned that privately issued stablecoins could undermine monetary policy and has instead pushed for a digital euro. Commercial banks, however, have resisted an ECB-issued version, fearing deposit flight into central bank-backed wallets.



The nine-bank consortium says its token will enable near-instant settlement, lower-cost payments and programmable financial services across borders. A CEO is expected to be appointed soon, and additional banks may join the effort.



This is a developing story.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

European banks form consortium to launch euro stablecoin

Macauley Peterson

YO, short for Yield Optimizer, launched a yoEUR vault on Friday, adding fresh momentum to the euro stablecoin trade. But market infrastructure still lags behind. Cross-chain liquidity for Circle’s EURC is limited, causing distortions in interest rates on borrow and lending markets not seen with larger USD-pegged stablecoins.



yoEUR is a <a href="https://blockworks.co/tag/multichain">multichain</a> yield vault designed to optimize returns on EURC. Like YO’s earlier offerings, covering ETH, BTC and USD, the vault allocates capital across multiple chains and strategies using a risk-adjusted framework.



The “yoTokens implement the <a href="https://blockworks.co/tag/erc-4626">ERC-4626</a> tokenized vault standard, with key additions to support a multi-chain architecture,” YO Labs CEO Driss Benamour told Blockworks. “YO deposits are currently on <a href="https://blockworks.co/tag/base">Base</a>, with one-click deposits supported from multiple chains, including <a href="https://blockworks.co/tag/arbitrum">Arbitrum</a>, via integrated routing and bridging. YO actively harvests yields across multiple chains, including <a href="https://blockworks.co/tag/ethereum">Ethereum</a>, Base, and <a href="https://blockworks.co/news/unichain-mainnet-is-live">Unichain</a>, with Arbitrum coming soon.”



Asked about visibility into yield positions, Benamour said: “All YO strategies are fully transparent and accessible on the dApp…Users can always track exactly where their assets are allocated via the dApp.”



The launch comes as euro-denominated stablecoins inch further into the DeFi spotlight, thanks to a dollar weakness. The greenback has been ranging over the summer, but is down roughly -12% against the euro year-to-date.



On Solana’s <a href="https://blockworks.co/podcast/lightspeed/3274fdb8-7f13-11f0-b217-8b38893dcf35">Jupiter Lend</a> kicked off <a href="https://x.com/kashdhanda/status/1963135217738149902">a two-month</a> incentive program pushing posted EURC APYs above 7%.



Aave founder Stani Kulechov has repeatedly <a href="https://x.com/StaniKulechov/status/1956645156762820709">promoted</a> ~5% lending yields on EURC via Aave deployments on Base and Ethereum that support EURC.



But the euro carry trade remains fragmented. On Aave v3 Ethereum, borrow rates for EURC briefly spiked to nearly 20% around 6:00 a.m. ET Friday before falling below 8% by 11:00 a.m. — a textbook case of what happens when a tightly capped market brushes up against Aave’s interest rate “kink.” Once utilization crosses a certain threshold, even small net borrows can send rates soaring until new supply arrives.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="845" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-45.png?w=1024&amp;h=1024" alt="" class="wp-image-107272" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-45.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-45.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-45.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-45.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-45.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-45.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-45.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-45.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-45.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /><figcaption class="wp-element-caption">Source: <a href="https://aavescan.com/ethereum-v3/eurc">Aavescan.com</a></figcaption></figure>



In theory, borrowers could arbitrage the spread — borrow where liquidity is cheap (e.g., Base) and lend where it’s scarce (mainnet). But in practice, bridging friction kills the trade. Unlike USDC, EURC lacks a native <a href="https://bridg.sh/?to=ethereum&amp;from=base">CCTP-style</a> burn-and-mint bridge, so most flows rely on swap-and-bridge routes or CEX rails.



Portal (Wormhole’s token bridge) has been <a href="https://x.com/wormhole/status/1959964316968640921">promoting</a> EURC bridging between chains following its August launch, but even at a modest €10,000 size, transfers from Base to <a href="https://blockworks.co/tag/solana">Solana</a> clock in at ~33 bps, and Solana to Ethereum via Portal at ~49 bps. Base to Ethereum EURC bridges can be done for a more modest ~22 bps per via <a href="https://blockworks.co/news/squid-upgrade-cross-chain-abstraction">Squid router</a>.



All of these spreads will increase with size, of course, making it difficult to bring rates in line without relying on, for example, Coinbase as an intermediary.



But this can be an advantage for the little guy with capital already in place on these chains. Jupiter’s boost lifts APYs on Solana, but the cost to move funds in and out quickly discourages hedge-fund scale operations. Aave’s mainnet spikes tend to be driven by caps and a small number of large wallets, not durable demand. Risk curator Chaos Labs has <a href="https://governance.aave.com/t/chaos-labs-risk-stewards-increase-supply-and-borrow-caps-on-aave-v3-08-14-25/22934">twice moved</a> to raise the caps on EURC specifically on Aave’s core instance.



A vault that rotates between chains and strategies can theoretically harvest what individual users can’t.



“The euro is one of the most widely traded currencies in the world,” Benamour said. “With yoEUR, we’re unlocking the best DeFi yield for euro-denominated stablecoins, making it easy for anyone to earn more on their assets.”



As of today yoEUR is principally allocated to <a href="https://x.com/yeluacaM/status/1959729262765723887">Tokemak’s baseEUR vault</a> for which yields are boosted by <a href="https://blockworks.co/price/toke">TOKE</a> token emissions. That would make it appealing to users who don’t want to be bothered with, or gain a tax benefit from avoiding, having to claim rewards. There can also be advantages in terms of risk management, with both concentration risk mitigated and a confidence boost from risk ratings by Exponential.



Euro stablecoins in aggregate now top $540 million in <a href="https://www.coingecko.com/en/categories/eur-stablecoin">market cap</a>. But until native cross-chain mobility arrives, and money market caps scale up, expect rates to stay weird.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

erc-4626

Euro stablecoin push runs into thin liquidity

David Canellis

This is a segment from the Supply Shock newsletter. To read full editions, <a href="https://blockworks.co/newsletter/supplyshock" target="_blank" rel="noreferrer noopener">subscribe</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Adoption does not follow a straight line.



At least, not at the local level. But definitely, if you <a href="https://ourworldindata.org/grapher/ict-adoption">amalgamate</a> the world’s adoption rate for mobile phone subscriptions and the internet, the line will indeed go straight up.&nbsp;



Zoom into individual countries, though, and you’ll soon see that the road to widespread usage can be rocky — but the result is still the same.



Greece in July 2015 was in the midst of an all-out banking crisis.



The European Central Bank had declined to further prop up Greek banks with emergency debt. By this point, Greece was only just <a href="https://www.dw.com/en/greece-meets-imf-payment-deadline/a-18371436">scraping</a> together repayments for a 1.6 billion euro ($1.9 billion) loan from the IMF which had fallen into arrears at the end of June.



Greece’s government scrambled to secure alternative financing but failed. Having judged the terms of the ECB’s deal as politically <a href="https://www.bbc.com/news/world-europe-31055069">toxic</a>, the then-prime minister instead called a snap referendum over whether to accept.



Initial deal <a href="https://content.fortune.com/wp-content/uploads/2015/07/draft16h.pdf">terms</a> ranged from indefinite austerity to further cuts to pensions to forced pre-approval of domestic laws to the placing of 50 billion euro ($58.5 billion) in national assets into a fund supervised by EU representatives.



Greeks <a href="https://www.pbs.org/newshour/world/third-greek-atms-empty-saturday-tsipras-declares-referendum">rushed</a> to ATMs to withdraw cash as soon as the referendum was called, resulting in an <a href="https://www.bbc.com/news/world-europe-33305019">emergency</a> bank holiday and capital controls. Withdrawals were restricted to just 60 euros ($70) per day, international transfers were mostly barred and the local stock exchange was closed.



Three days later, Greece became the first developed country to ever default on an IMF loan obligation. This effectively isolated Greece financially until votes were counted.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Greece almost left the euro at 6am this morning <a href="http://t.co/xDCYXouFaZ">http://t.co/xDCYXouFaZ</a> <a href="http://t.co/BiQsArYs1d">pic.twitter.com/BiQsArYs1d</a>&mdash; Matt O&#39;Brien (@ObsoleteDogma) <a href="https://twitter.com/ObsoleteDogma/status/620565071039627264?ref_src=twsrc%5Etfw">July 13, 2015</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Citizens <a href="https://www.theguardian.com/business/2015/jul/05/greek-referendum-no-vote-signals-huge-challenge-to-eurozone-leaders">voted</a> against the deal (61.3%), plunging the Eurozone into another two weeks of deliberations, which almost resulted in Greece leaving the eurozone altogether, as shown above. The government eventually approved austerity measures later in July. The situation would continue to play out for the rest of the year.



When we talk of Bitcoin’s true value proposition — the one underneath the price talk and financial tinkering — it’s hard to find one better than this precise example: Banks and the stock market have effectively locked you out of your value, and even when they can access it, you can only ever get less than $100 cash at a time.



Bitcoin obviously fixes this. If Satoshi had launched Bitcoin in 2015 instead of 2009, perhaps they would’ve buried a headline about the Greek debt crisis in the genesis block instead of one about the UK.



And certainly, people in Greece did turn to Bitcoin. One exchange <a href="https://www.ekathimerini.com/news/198934/fearing-return-to-drachma-some-greeks-use-bitcoin-to-dodge-capital-controls/#:~:text=New%20customers%20depositing%20at%20least,quadrupled%20to%20around%20700%20euros">reported</a> thousands of new users and locals shared tips on how to buy bitcoin on Reddit and the Greek-language <a href="https://bravenewcoin.com/insights/bitcoin-in-greece#:~:text=Nevertheless%2C%20signs%20of%20Bitcoin%20adoption,lately%2C%20coinciding%20with%20recent%20events">version</a> of Bitcointalk.&nbsp;



Their efforts were frustratingly hamstrung by capital controls — banks blocked most transfers, including potential deposits to crypto exchanges for buying bitcoin.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Nothing like capital controls to focus the mind! First Bitcoin Meetup in Greece <a href="https://t.co/fFiYKxpFtR">https://t.co/fFiYKxpFtR</a> v/<a href="https://twitter.com/RedditBTC?ref_src=twsrc%5Etfw">@RedditBTC</a> <a href="http://t.co/ly3aRQJfnX">pic.twitter.com/ly3aRQJfnX</a>&mdash; Jon Matonis (@jonmatonis) <a href="https://twitter.com/jonmatonis/status/621346504280829952?ref_src=twsrc%5Etfw">July 15, 2015</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“If Greeks already have cash in hand, bitcoin is unnecessary. If they don’t, then bitcoin is unattainable. It’s a bank liquidity crisis,” Andreas Antonopoulos <a href="https://x.com/aantonop/status/615571506630905856">tweeted</a> as local banks were closing.



Still, the price of bitcoin did rise somewhat during the ordeal, but it would only really start to take off toward the end of the year, when the worst of it was over.



The Greek debt crisis showed the world what happens when the fiat system fails a population. But when push comes to shove, it’s clear that Bitcoin as a safety net works best when you’ve planned ahead.



After all, it’s tough to build a doomsday bunker on the day after doomsday.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Euro

What the Greek debt crisis taught us about Bitcoin, 10 years on

Casey Wagner

Bitcoin hit a new all-time high Monday against the euro, surpassing 60,000 euros (approximately $65,000) according to Coinbase and CoinMarketCap.



Coinbase clocked bitcoin’s new record euro price at 60,549.61 euros early Monday. CoinMarketCap’s figure was not far off at 60,417.87 euros. Kraken and data firm TradingView came in at the lower end of the range, clocking a new high price of 60,393.00 euros Monday.



Bitcoin’s previous record high against the euro was set in September 2021, months ahead when most exchanges and data providers recorded bitcoin’s all-time high against the dollar in November 2021. TradingView has bitcoin’s previous high against the euro at around 53,000 euros in late September 2021. 



When looking at bitcoin’s high against the US dollar, traders are left with a larger range.&nbsp;



Read more: <a href="https://blockworks.co/news/inflation-rises-btc-63k">Bitcoin holds above $63k after inflation rises as expected</a>



<a href="https://www.coinbase.com/price/bitcoin">According</a> to Coinbase, bitcoin has already surpassed its 2021 high against USD when it hit $65,565.75 Monday. The crypto exchange had bitcoin’s previous record high at around $64,000.



CoinMarketCap says bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) peaked at $68,789.63 in November 2021. CoinGecko has the largest figure, claiming that bitcoin’s all-time high is $69,044.77, also set in November 2021.



Arbitrage across exchanges and data providers is nothing new in the cryptocurrency space. Trading volumes, fees and liquidity vary on different platforms, contributing to the discrepancies.



Plus, exchanges like Coinbase factor in spread, allowing the platform “to temporarily lock in a price for trade execution while you review the transaction details prior to submitting your transaction,” the exchange <a href="https://help.coinbase.com/en/coinbase/trading-and-funding/buying-selling-or-converting-crypto/understanding-slippage-and-spread">said</a>.



Read more: <a href="https://blockworks.co/news/wealth-managers-feel-pressure-bitcoin-etfs">Restricting access to growing bitcoin ETFs becoming ‘hard to justify’</a>



For traders looking to profit off of different prices, the arbitrage opportunities today are less lucrative than in the past. Spreads across exchanges in 2020 routinely hit around 4%, according to crypto media company CoinCodeCap.



At time of publication Monday, compared to USD, the biggest spread between Coinbase, Kraken, Gemini and Binance was between Binance and Kraken, with Binance pricing bitcoin around 0.5% higher than Kraken.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Bitcoin has a new all-time high, depending on who you ask 

Katherine Ross

The European Union is heading into the “preparation phase” of its digital euro project.



According to the Governing Council of the European Central Bank, the next phase will start on Nov. 1 and will last two years. The ECB first launched an investigation into the digital euro back in 2021.



“It will involve finalizing the digital euro rulebook and selecting providers that could develop a digital euro platform and infrastructure. It will also include testing and experimentation to develop a digital euro that meets both the Eurosystem’s requirements and user needs, for example in terms of user experience, privacy, financial inclusion and environmental footprint,” the ECB <a href="https://www.ecb.europa.eu/press/pr/date/2023/html/ecb.pr231018~111a014ae7.en.html">wrote</a>.



Digital privacy is a priority for the digital euro, with the Eurosystem hiding personal data and aiming to “achieve a cash-like level of privacy for offline payments.”



Read more: <a href="https://blockworks.co/news/eu-digital-euro-uses-utxo">European Union&#8217;s digital euro may run on UTXO</a>



The Eurosystem will also <a href="https://www.ecb.europa.eu/paym/digital_euro/investigation/profuse/shared/files/dedocs/ecb.dedocs231018.en.pdf">plan</a> to maintain the ledger or “root of title” of the money being issued as well as the settlement of transactions of the digital euro. The Eurosystem, therefore, would “take responsibility for recoding digital euro liabilities in its own books.”



“We envisage a digital euro as a digital form of cash that can be used for all digital payments, free of charge, and that meets the highest privacy standards. It would coexist alongside physical cash, which will always be available, leaving no one behind,” ECB President Christine Lagarde said.&nbsp;



Read more: <a href="https://blockworks.co/news/european-central-bank-launches-24-month-investigation-into-digital-euro">European Central Bank launches 24-month investigation into digital euro</a>



In the previous — or current until November — phase, the ECB ran tests and “concluded that it is possible to smoothly integrate a digital euro into the existing payment landscape, while still leaving scope for the market to use innovative features and technologies when distributing a digital euro.”



While the project moves into its next phase, the ECB noted that it is “closely” following legislation and a decision on a digital euro will be considered “only after the legislative act is adopted.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

digital currencies

The EU’s digital euro is inching closer to the ‘preparation phase’

Sebastian Sinclair

Binance revealed Wednesday payment solutions provider, Paysafe, has “unilaterally” ceased processing EUR deposits for its users, following through on its announcement earlier this year to pull support for the embattled exchange.



The decision has triggered a cascade of changes in Binance&#8217;s service offerings for Paysafe users, affecting everything from spot trading to auto-invest plans.



Beginning Thursday at 04:00 UTC, Binance’s Paysafe users will also no longer be able to buy or sell crypto with euros. In addition, the exchange is canceling all open orders on EUR spot trading pairs related to the payment provider.



Binance is advising its customers to either convert their EUR balances to USDT by Oct. 31 or withdraw them to their bank accounts.&nbsp;



For months, Binance had reportedly been aware of Paysafe’s intentions that it would discontinue EUR deposits and withdrawals via bank transfer for Binance users starting Sept. 25.



An orderly and fair process to end Paysafe’s service to Binance was planned over a series of months, beginning at the end of June, though the exchange’s language on Wednesday appears to indicate it has been caught off guard.



“The sudden and inexplicable decision by Paysafe will cause a brief interruption to the following services,” Binance said in a statement. “We apologize for any inconvenience.”



A spokesperson for the exchange did not immediately return Blockworks’ request for comment.



Paysafe began <a href="https://blockworks.co/news/binance-loses-uk-banking-gbp">stepping away</a> from the exchange as early as May this year, forcing Binance to end deposits and withdrawals denominated in the British pound until it found a new banking partner.&nbsp;



The developments came as the exchange faced <a href="https://blockworks.co/news/irs-justice-department-probing-binance">several probes</a> from US regulators and authorities, as well as several countries’ decisions to terminate its license to operate across <a href="https://blockworks.co/news/binance-loses-australia-license">multiple jurisdictions</a>.



The suspension Thursday also impacts automated trading services for certain euro-based trading pairs, as well as a feature called &#8220;Convert,&#8221; which, as of now, only allows selling but not buying euros, Binance said. Investment plans in euros will be halted for Paysafe users at the same time.



The exchange said it was “working to integrate new fiat channels onto Binance soon.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Binance

Paysafe pulls the plug on Binance’s euro on-ramp

The European Union prototyped how a digital euro would work, according to a report published in late May. 



The back-end prototype and settlement engine, which was designed by Eurosystem, is called N€XT. Instead of using a distributed ledger technology (DLT) platform — which often utilize account systems akin to Ethereum — the governing body <a href="https://www.ecb.europa.eu/pub/pdf/other/ecb.prototype_summary20230526~71d0b26d55.en.pdf">tested</a> out the digital euro on a model based on unspent transaction output (UTXO).&nbsp;



“The tests showed that [UTXO] allows for fast and efficient validation of transactions. This system proved capable of supporting different types of transactions, while protecting users’ privacy by not revealing their payment patterns or account balances to the Eurosystem,” the <a href="https://www.ecb.europa.eu/pub/pdf/other/ecb.prototype_summary20230526~71d0b26d55.en.pdf">report</a> said.



One of the ECB’s objectives was to ensure that any version of a digital euro would still allow users to retain privacy, for which N€XT — through UTXO — allows.



N€XT “natively supports one-time UTXO addresses and does not need to know which wallet holds the UTXOs, nor the identity or pseudonym of their owner, in order to process UTXO transactions.”



The ECB laid out both the architecture and the challenges faced in the test. It stated that “two different large data sets need to be stored: the transactions and the UTXOs. Considering all these requirements, a scalable solution needs to rely on sharding.”



<h2 class="wp-block-heading">Digital euro could support offline payments</h2>



The prototype test took place over a span of eight months, from July 2022 to February 2023. The ECB explored how to implement and integrate a digital euro into the existing “payments landscape” in the EU.&nbsp;



The platform was designed alongside five different front-end prototypes (user interfaces) for the exercise. Those interfaces were contributed by private companies that responded to a public call by the ECB.&nbsp;



The front-end prototype each covered possible use cases, including person-to-person payments conducted both online and offline, shop payments by both a payer and payee and e-commerce payments.&nbsp;



“Additional prototyping work could explore technical alternatives for later design decisions that could not be included in the scope of this exercise, such as the set-up for cross-currency payments, dispute management and fraud management,” the ECB noted at the end of the report.



Back in 2021, the ECB initially announced that it was <a href="https://blockworks.co/news/european-central-bank-launches-24-month-investigation-into-digital-euro">launching an investigation into a digital euro</a>.



The ECB, <a href="https://blockworks.co/news/banks-pen-paper-cbdc-implementation">alongside six other financial institutions</a> — including the Bank of England and the Fed — penned a paper stating that some institutions are getting to a point where they may “decide on whether or not to move to the next stage of their CBDC work.”



However, the US and the BOE acknowledged that they’re not ready to move forward with CBDC implementation.&nbsp;



The ECB said it will <a href="https://www.ecb.europa.eu/paym/intro/news/html/ecb.mipnews230526.en.html">decide</a> in the fall of 2023 whether it wants to keep testing and developing a potential digital euro.&nbsp;



The EU <a href="https://blockworks.co/news/eu-parliament-passes-mica-vote">recently passed the Markets in Crypto Assets</a>, which requires crypto firms to register with the EU’s member states and gives the European Securities and Markets Authority as well as the European Banking Authority the ability to oversee the compliance of the firms.&nbsp;



<h2 class="wp-block-heading">News analysis by David Canellis</h2>



The UTXO model may be familiar to some, because it’s also used for Bitcoin. Other prominent public blockchains including Litecoin and Cardano are built on UTXO.&nbsp;



Wallets in Bitcoin’s UTXO system don&#8217;t hold the BTC themselves, but they manage the private keys necessary to sign transactions. The wallets effectively validate the user&#8217;s right to &#8216;move&#8217; BTC (or rather, adjust the balances) from one account to another on the ledger.



<ul class="wp-block-list">
<li>In the UTXO model, bitcoin isn&#8217;t &#8216;stored&#8217; in addresses in the way that funds are stored in a physical bank vault.&nbsp;</li>



<li>Instead, the blockchain serves as a digital ledger recording the movement of BTC.&nbsp;</li>



<li>Ownership of BTC is established through a chain of digital signatures from previous transactions.&nbsp;</li>
</ul>



UTXO systems confirm private key holders have the power to spend the inputs, or currency, intended for transactions. An account-based system like Ethereum would instead check a user’s token balance before allowing them to transact.



While there are similarities between N€XT’s underpinnings and Bitcoin architecture, the two networks would still be drastically different in terms of decentralization.&nbsp;



Anyone with the right equipment can join the Bitcoin network to coordinate consensus. On the other hand, N€XT, if it weren’t controlled solely by the European Central Bank, is likely to be maintained by a handful of colluding entities with no opportunity for public participation.&nbsp;



Bitcoin is governed by a decentralized web of various entities, all working together in pursuit of a trustless money network untouched by the state. N€XT would instead harness blockchain and UTXO to exert supreme power over a system designed to enhance a fiat currency.



Jeffrey Albus contributed analysis.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Bitcoin

European Union’s Digital Euro May Run on UTXO — Like Bitcoin

Bessie Liu

Societe Generale’s cryptocurrency team FORGE has announced plans for a euro-pegged stablecoin, EUR CoinVertible (EURCV), on the Ethereum blockchain.



The project is designed to offer institutional investors a different way to manage their cash flow and bridge any gaps between traditional markets and the emerging digital asset class.&nbsp;



EURCV will comply with the <a href="https://blockworks.co/tag/european-union">European Union</a>&#8216;s banking, legal and regulatory standards.



“SG-FORGE believes that regulation will bring legitimacy to innovative distributed technologies and will provide consumer protection. We also believe that regulation will not stifle digital innovation and disruptive ideas,” the company wrote in a <a href="https://www.sgforge.com/wp-content/uploads/2023/04/SGF_Coinvertible_White-Paper-v1.0.pdf">white paper</a> outlining the details of EURVC.



SG-FORGE would be the issuer of the stablecoin, and the collateral that backs the token will be managed by a “reputable agent, under a relevant legal framework for fiduciaries based on applicable law.”



Importantly, the collateral will be legally separated from the SG-FORGE team.&nbsp;



In the case that the stability mechanisms are threatened, EURVC holders will be recognized as beneficiaries of the fiduciary and will have the ability to redeem their collateral.&nbsp;



“Stablecoin holders will still be entitled to full conversion of their position in the occurrence of events that would prevent the public Ethereum blockchain from working properly,” the white paper said.



“In other words, our legal structure will protect our clients from technological failures on blockchain in a manner that does not exist in the market today,” the document highlighted.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Euro-pegged Stablecoin From Societe Generale in the Works

Coinbase, one of the largest centralized crypto exchanges in the world, is adding Circle’s euro-pegged stablecoin (EUROC) to its token roster.



<a href="https://blockworks.co/price/euroc">EUROC</a> is a stablecoin issued by Circle pegged one-to-one to the euro <a href="https://www.circle.com/en/euro-coin">through</a> overcollateralized euro-backed reserves.&nbsp;



Circle’s widely-used USD token (USDC) is the second-largest stablecoin in the world, first deployed by Centre, a <a href="https://www.circle.com/blog/coinbase-and-circle-co-found-the-centre-consortium">consortium</a> it co-founded with Coinbase in 2018.



The trading of EUROC on Coinbase will begin at 9 am PT on Feb. 22, pending liquidity conditions, Coinbase Assets <a href="https://twitter.com/CoinbaseAssets/status/1628077717596798986">tweeted</a>.&nbsp;



“Once sufficient supply of this asset is established, trading on our EUROC-USD and EUROC-EUR trading pairs will launch in phases,” the company said.



A Circle spokesperson <a href="https://blockworks.co/news/circles-euroc-stablecoin-will-trade-only-within-the-us-at-least-for-now">previously told</a> Blockworks that the stablecoin would adhere to “prudential standards” that apply to existing fintech and payments companies in the US including PayPal, Stripe, Square and Venmo.



EUROC’s market capitalization is still relatively low, at <a href="https://blockworks.co/price/euroc">$33.9 million</a>, compared to Tether’s EURT, which has a market capitalization of <a href="https://www.coingecko.com/en/coins/euro-tether/usd#:~:text=EURT%20to%20USD%20Chart,month%20(30%20days)%20ago.">$218 million</a>, per CoinGecko.



Coinbase’s EUROC will be tagged with an experimental label — ​​often given to tokens that are new to the Coinbase platform or have low trading volume. The issuance of the token may too, be restricted in a handful of jurisdictions.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Circle

Circle Euro Stablecoin Finally Gets A Run On Coinbase

Ben Strack

<div id="highlights-block_62ec298cd2be1" class="highlights">
 <ul>
 <li>The Europe, Middle East and Africa region accounts for 28% of total bitcoin and ether futures contracts traded, CME Group exec says</li>
 <li>Daily open interest on CME’s crypto products averaged nearly 127,000 contracts in July — up 59% from the previous month</li>
 </ul>
 
</div>



Derivatives marketplace <a href="https://www.cmegroup.com/" target="_blank" rel="noreferrer noopener">CME Group</a> is set to offer its first euro-denominated bitcoin and ether futures this month after its crypto derivatives <a href="https://cms.blockworks.co/cme-logs-record-crypto-derivative-trades-in-q2/" target="_blank" rel="noreferrer noopener">posted record open interest</a> volumes during the second quarter.



The upcoming cash-settled products are designed to match their US dollar-denominated counterparts. Bitcoin euro futures are set to be comprised of five bitcoins (BTC) per contract, while the ether euro futures are slated to start with 50 ether (ETH).&nbsp;



Tim McCourt, CME’s global head of equity and foreign exchange products, said demand for risk management solutions by institutional investors outside the US is increasing as crypto market uncertainty persists.&nbsp;



Euro-denominated cryptocurrencies are the second-highest traded fiat behind the US dollar, McCourt added. The number of bitcoin and ether contracts traded in Europe, the Middle East and Africa represent about 28% of worldwide totals, he said, which is up more than 5% from 2021.



The upcoming launch comes after CME’s crypto derivatives <a href="https://cms.blockworks.co/cme-logs-record-crypto-derivative-trades-in-q2/" target="_blank" rel="noreferrer noopener">posted record open interest</a> — an average of 106,000 contracts per day — and higher than average daily volumes of 57,000 contracts during the second quarter. 



In July, daily open interest on the exchange’s crypto products averaged nearly 127,000 contracts, a spokesperson told Blockworks, up 59% from the previous month. Average daily volume on those products was roughly 62,000 contracts — about 11% higher than June.&nbsp;



CME began offering bitcoin futures in 2017 and went on to add an ether version in February 2021. The company launched <a href="https://cms.blockworks.co/cme-group-to-launch-cash-settled-micro-bitcoin-futures/" target="_blank" rel="noreferrer noopener">cash-settled micro bitcoin futures contracts</a> — worth 10% of one bitcoin — last year and moved in November to add <a href="https://cms.blockworks.co/cme-group-plots-launch-of-micro-ether-futures/" target="_blank" rel="noreferrer noopener">micro ether futures</a>, as Ethereum liquidity grew. 



“At this time, we have no plans to introduce additional products,” a CME Group spokesperson told Blockworks. “We remain focused on continuing to grow our current suite of crypto offerings.”&nbsp;&nbsp;



Micro ether futures in particular are gaining steam, as more than 3.2 million such contracts have traded in the last eight months, CME Group reported.



Average daily open interest of micro ether futures reached 47,000 contracts in July, while average daily volumes hit nearly 26,000 contracts — up 43% and 41%, respectively, from June.



A CME spokesperson attributed the spike in part to ether’s increasing price, noting that its micro ether contracts settled at $1,014 on June 30. The price of ETH at 3 pm ET was roughly $1,600.&nbsp;



The representative also called <a href="https://cms.blockworks.co/the-investors-guide-to-the-ethereum-merge/" target="_blank" rel="noreferrer noopener">Ethereum’s upcoming Merge</a>, the blockchain’s switch from a <a href="https://cms.blockworks.co/proof-of-work-vs-proof-of-stake-whats-the-difference/" target="_blank" rel="noreferrer noopener">proof-of-work consensus mechanism</a> to a proof-of-stake alternative, “one of the most anticipated events in the crypto space to date.” 



The spokesperson said 78% of micro ether options open interest mature in September or December, suggesting traders are hedging risk ahead of the Merge.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

CME Group

CME Group Rolling Out First Euro-settled Crypto Derivatives

Jocelyn Yang

<div id="highlights-block_62cde72992b2f" class="highlights">
 <ul>
 <li>BTC’s move below $20,000 wasn’t as critical as it was before but still noteworthy, one analyst said</li>
 <li>Oil prices continued to fall after the euro briefly hit parity with the US dollar, and concern grew about Covid-19 in China</li>
 </ul>
 
</div>



Major cryptoassets continued falling Tuesday amid a choppy market. Bitcoin (BTC) traded at $19,384, down 5.25% in the past 24 hours, while ether (ETH) slid further, down 8.54% to $1,040 as of 4:00 pm ET.&nbsp;



Craig Erlam, senior market analyst at OANDA, however, thought BTC’s fall to $20,000 wasn’t as critical as it was last month, although “certainly noteworthy that it repeatedly looks to dip below [$20,000].”&nbsp;



“A move below $17,500-$18,500 support could accelerate the sell-off, while a break of $19,500 may also signal further pain to come,” Erlam wrote in a note Tuesday. 


[stock_market_widget type=&#8221;accordion&#8221; template=&#8221;chart&#8221; color=&#8221;#832ACD&#8221; assets=&#8221;BTC-USD,ETH-USD&#8221; start_expanded=&#8221;true&#8221; display_currency_symbol=&#8221;true&#8221; api=&#8221;yf&#8221; chart_range=&#8221;1mo&#8221; chart_interval=&#8221;1d&#8221;]



DeFi leaders carried over their bearish trend from Monday, with Aave’s token down 7.42% to $68.5, while Maker’s token was down 8.4% to $837.23.&nbsp;



Some investors are shrugging off the market downturn. <a href="https://cms.blockworks.co/tag/multicoin-capital/" target="_blank" rel="noreferrer noopener">Multicoin Capital</a> announced <a href="https://cms.blockworks.co/despite-slow-q2-vc-dollars-are-coming-back-to-crypto/" target="_blank" rel="noreferrer noopener">a new $430 million venture fund</a>, and Solana developers Dylan and Ian Macalinao&#8217;s <a href="https://techcrunch.com/2022/07/12/protagonist-launches-100m-fund-to-make-early-stage-crypto-companies-the-main-character/" target="_blank" rel="noreferrer noopener">Protagonist</a> launched its first $100 million fund to focus on early-stage crypto companies. 



US equities eased back, too. The S&amp;P 500 closed at 3,819, down 0.92%, the DJIA dropped 0.61% and the Nasdaq fell by 1.81%.


[stock_market_widget type=&#8221;accordion&#8221; template=&#8221;chart&#8221; color=&#8221;#832ACD&#8221; assets=&#8221;^GSPC,^DJI,^IXIC&#8221; start_expanded=&#8221;true&#8221; display_currency_symbol=&#8221;true&#8221; api=&#8221;yf&#8221; chart_range=&#8221;1mo&#8221; chart_interval=&#8221;1d&#8221;]



Ending a long wait, the euro briefly hit parity with the US dollar, but struggled back to just a penny over $1 Tuesday afternoon. Commodities slid further, with oil taking the lead. Brent crude futures were <a href="https://www.wsj.com/market-data/quotes/futures/UK/BRENT%20CRUDE" target="_blank" rel="noreferrer noopener">trading</a> 7.1% lower at $99.04 a barrel as of 3:21 pm ET, as the fear of another Covid-19 lockdown in China grows. OPEC&#8217;s monthly report released today forecast <a href="https://www.reuters.com/business/energy/opec-forecasts-slower-oil-demand-growth-2023-2022-07-12/" target="_blank" rel="noreferrer noopener">slower oil demand growth</a> in 2023. 



“We believe that the firm US dollar, which has now almost reached parity with the euro, is weighing on prices,” Commerzbank <a href="https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/natural-gas/071222-oil-futures-brent-falls-below-100-as-china-pandemic-response-weighs-on-demand-outlooks" target="_blank" rel="noreferrer noopener">said</a> in a July 12 note. “The combination of high energy prices and rising interest rates is fuelling concerns about a recession that would have a serious impact on oil demand.”



More firms are rolling out their second-quarter final reports this week. ​​Layer-1 smart contract platform <a href="https://cms.blockworks.co/tag/Avalanche/" target="_blank" rel="noreferrer noopener">Avalanche</a> reported its Q2 total value locked fell roughly 75% in USD terms from the first quarter. Yet, the amount of AVAX locked in DeFi (decentralized finance) increased, according to <a href="https://messari.io/article/state-of-avalanche-q2-2022" target="_blank" rel="noreferrer noopener">Messari</a> analysts. 



Meanwhile, investors are closely watching the June US Consumer Price Index (CPI) report, scheduled for release tomorrow.&nbsp;



<h3 class="wp-block-heading">Top Stories</h3>



<a href="https://cms.blockworks.co/ecb-issues-three-reports-in-effort-to-pass-biggest-crypto-law-in-europe/" target="_blank" rel="noreferrer noopener">ECB Issues Three Reports in Effort To Pass Biggest Crypto Law in Europe</a>



<ul class="wp-block-list"><li>The European Central Bank (ECB) is calling policymakers and member states to pass the Markets in Crypto-Assets (MiCA) law, Europe’s first attempt at comprehensive policy around cryptocurrencies.&nbsp;</li><li>“Recent developments show that stablecoins are anything but stable, as exemplified by the crash of TerraUSD and the temporary de-pegging of Tether,” the ECB report noted.&nbsp;</li></ul>



<a href="https://cms.blockworks.co/3acs-zhu-and-davies-to-skip-liquidators-court-hearing-email-shows/" target="_blank" rel="noreferrer noopener">3AC’s Zhu and Davies To Skip Liquidators’ Court Hearing, Email Shows</a>



<ul class="wp-block-list"><li>Three Arrows Capital (3AC)’s co-founders Su Zhu and Kyle Davies are not yet ready to oblige the fund’s liquidators after being accused of not cooperating with them meaningfully.&nbsp;&nbsp;</li><li>&#8220;Sadly, our good faith to cooperate with the Liquidators was met with baiting. Hope that they did exercise good faith wrt the StarkWare token warrants,&#8221; Zhu said in a tweet Tuesday, including screenshots of his lawyer’s emails to Russell Crumpler, a 3AC liquidator.&nbsp;</li></ul>



<a href="https://cms.blockworks.co/qa-community-banks-moving-forward-with-crypto-plans-despite-downturn-portfolio-manager-says/" target="_blank" rel="noreferrer noopener">Q&amp;A: Community Banks Moving Forward With Crypto Plans Despite Downturn, Portfolio Manager Says</a>



<ul class="wp-block-list"><li>Portfolio manager Steve Russell said he thought many banks with crypto- and blockchain-related plans are currently oversold.&nbsp;</li><li>More banks will get involved in blockchain for mortgage-related activities, Russell expects.</li></ul>



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Market Wrap: Bitcoin, ETH and DeFi Assets Drop as Markets Close Choppy Day

<div id="highlights-block_62c4a3a356a77" class="highlights">
 <ul>
 <li>Negative interest rates in the eurozone have led to fewer stablecoins being pegged to the euro, industry exec says</li>
 <li>US-headquartered Silvergate bank will be listed as the initial custodian of the token</li>
 </ul>
 
</div>



Cryptocurrency-focused peer-to-peer payment processor Circle is looking to build momentum behind its new euro-backed stablecoin.



The stablecoin, EUROC, launched June 30 as Circle’s second stablecoin — which falls more or less in line with the regulatory and security standards of the company’s more prevalent dollar-backed USD Coin (USDC). The company’s other products are mostly related to DeFi, including custodial solutions and lending.&nbsp;



US-headquartered Silvergate bank will be listed as the initial custodian of the token, and it will not be available to non-US customers until relevant licenses are obtained.



A Circle spokesperson told Blockworks the “prudential standards” for the new stablecoin will adhere to US “regulatory standards that apply to leading fintech and payments firms,” including PayPal, Stripe, Square and Venmo. 



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Pursuant to our licenses, Circle will only solicit customers in the US,” the spokesperson said.</blockquote>



Stablecoins have been important financial infrastructure in the Web3 and DeFi (decentralized finance) space, and Circle’s EUROC marks the first pegged to the euro, the world’s second most-traded traditional finance currency.&nbsp;



It is likely that negative interest rates in Europe had been a large reason as to why so few stablecoins are pegged to the euro, Jonas Gross, head of digital assets and currencies at Etonec, told Blockworks.



“Fiat-backed euro stablecoins use the funds collected from users to invest in government bonds or to put this money in a bank account,” Gross said. “For both variants, interest rates have been negative for a long time. Thus, it was unprofitable to issue a fiat-backed euro stablecoin. As interest rates are generally increasing…the business model behind stablecoins becomes more promising.”



The status quo on rates — combined with the collapse of Terra stablecoin UST — triggered waves of uncertainty around stablecoin regulation in the European Union, including the Markets in Crypto Assets (MiCA) bill.



“Due to the regulatory uncertainty and the publication of MiCA in the EU (with specific regard to stable coins) multiple companies and startups in Europe are hesitant to build a stablecoin or Euro-pegged stablecoin in particular,” Maximilian Forster, co-founder and chief business officer of payments engine solution CashOnLedger, told Blockworks.



EU regulators recently <a href="https://cms.blockworks.co/eu-members-reach-agreement-on-mica/" target="_blank" rel="noreferrer noopener">reached an agreement</a> on MiCA which highlighted that large stablecoins will be subject to operational and prudential rules, and have a cap of 200 million euros in transactions per day.&nbsp;



European Parliament member Ernest Urtasun noted on <a href="https://twitter.com/ernesturtasun/status/1542591819980087297" target="_blank" rel="noreferrer noopener">Twitter</a> stablecoin reserves will have to be “legally and operationally segregated and insulated” and must be “fully protected in case of insolvency.”



Under MiCA guidelines, according to Forster, euro-backed stablecoins can only be traded on European grounds.



“Ultimately, the demand and critical mass will define the success and adoption rate of the EUROC,” Forster said.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Circle’s EUROC Stablecoin Will Trade Only Within the US — at Least for Now

Tiago Varzim

<div id="highlights-block_62b3337464a07" class="highlights">
 <ul>
 <li>The euro is the second-largest currency in the world, but has no major stablecoin nowadays</li>
 <li>Negative interest rates have held euro stablecoins back, but the ECB&#8217;s move to raise interest rates may accellerate adoption</li>
 </ul>
 
</div>



Stablecoins are predominantly US-dollar pegged projects, but the euro is coming for its slice of the pie. <a href="https://cms.blockworks.co/circles-new-euro-backed-stablecoin-mimics-usdc/" target="_blank" rel="noreferrer noopener">Circle’s announcement</a> of EUROC (Euro Coin) last week gave experts some confidence there will be a major euro-pegged stablecoin in the near future, even if it’s not clear when.&nbsp;



“So far we&#8217;re not seeing any euro stablecoin of relevance: very low liquidity and adoption,” Fabian Scholz, co-founder and CEO of Kudona, a German-based and Lithuanian-licensed cryptocurrency exchange, told Blockworks.&nbsp;



The euro, shared by 19 European Union member states, is the second-largest currency in the world, just behind the US dollar. Despite its global market share at around 19% across various indicators of international currency use, the euro has an insignificant representation in stablecoins.&nbsp;



While the crypto ecosystem has seen capital leaving in this bear market, dollar-pegged stablecoins managed to increase their dominance as investors looked for shelter in these turbulent weeks. Notwithstanding blowups like TerraUSD (UST), stablecoins are seen as a vehicle to park value without having to cash out to fiat currency, which often incurs fees.



Until now, only a few stablecoins have been pegged to the euro, such as Tether’s EURt — a sister stablecoin to the largest dollar-backed issue, USDT — or Stasis’ EURS. Far from the scale of dollar-pegged stablecoins, EURt has a market cap of roughly $218.4 million and EURS’ market cap sits around $130.1 million, <a href="https://www.coingecko.com/en/categories/stablecoins" target="_blank" rel="noreferrer noopener">according to CoinGecko</a>.



According to a <a href="https://www.ecb.europa.eu/pub/ire/html/ecb.ire202206~6f3ddeab26.en.html" target="_blank" rel="noreferrer noopener">report published last week</a> by the European Central Bank about the euro’s international role, the share of the euro in crypto markets is “extremely small,” at 0.2%. The Eurozone’s central bank recognizes that “stablecoins pegged to the euro have started to gain popularity, although the market remains in its infancy,” but warns that “stablecoins should not be regarded as a new class of safe asset but rather as a less volatile but risky cryptoasset.”



<figure class="wp-block-image"><img decoding="async" src="https://lh4.googleusercontent.com/ZeeU744pYr9edsVZGb36OPo8j5G0yGn6s_MUMcMRmPwA1v2-AYmfDpBi40pGmQWBg-1kHhwjc15zSgzBcYOQyjiya64uVixWQ4fBy3TAuUhlHmpyHgM5zgK33Ye_N4JBKaLmGxkOed8bhv6QMw" alt=""/><figcaption>Source: ECB</figcaption></figure>



Nevertheless, Patrick Hansen, EU policy expert and Crypto Venture Advisor at Presight Capital, believes there is a rising demand for a stablecoin denominated in euro which makes up to 40% of global SWIFT payments and 20% of FX global reserves.&nbsp;



“A widely-used and liquid euro stablecoin can enable and improve a wide range of interesting use cases for European investors and businesses: from a more efficient on/off ramp to crypto/DeFi, to remittance and B2B payments, a frictionless crypto FX market and much more,” Hansen told Blockworks.&nbsp;



Kudona’s Scholz predicts that big crypto players such as Circle or Binance “might be able to change that, but they&#8217;ll need a couple of months if not two or three years of adoption to increase liquidity and adoption on the DeFi side.”&nbsp;



That would be a game-changer for European investors, as they are exposed to FX (foreign exchange) risks against the dollar. So far in 2022, the eurozone’s currency lost 11% of its value against the dollar, and some analysts predict the two currencies will reach parity later this year.



For the moment, euro-based stablecoins are less liquid and “tend to be sold similarly to other risky assets rather than behaving like a vehicle in digital transactions and trading,” according to the ECB’s research. At the same time, the institution admits that a euro stablecoin could support the currency&#8217;s international profile.&nbsp;



<h3 class="wp-block-heading">Monetary policy normalization may accelerate adoption</h3>



A crucial question for an issuer of a euro-based stablecoin lies exactly in ECB’s purview. With its deposit facility rate at -0.5%, the European Central Bank makes it difficult to maintain a euro-pegged stablecoin with full reserves as issuers have to pay negative interest on bank deposits.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Negative interest rates on bank deposits are amongst the most important barriers for the development and growth of reserve-backed, Euro-denominated stablecoins,” acknowledged Hansen.&nbsp;</blockquote>



In a <a href="https://twitter.com/paddi_hansen/status/1515694575226032135?s=20&amp;t=zOafA3Hwha_hdU43d4UtqA" target="_blank" rel="noreferrer noopener">tweet </a>in April, before Circle’s announcement, Hansen calculated that the company could have to pay €250 million in interest on its euro reserves locked at the bank if it created a euro-pegged stablecoin with a market cap of €50 billion.&nbsp;



On EUROC’s website, Circle addresses the issue: “Circle assumes the interest rate risk on Euro Coin reserves, just as we do with USDC,” the company wrote.



But negative rates are about to become a thing of the past. The ECB announced it will raise its benchmark interest rate in July as well as in September. The deposit facility will follow suit, leaving negative territory and making it easier to sustain large amounts of euro reserves at the bank.&nbsp;



“This will undoubtedly be a key change and enabler for Euro-stablecoin issuers,” predicts Hansen.&nbsp;



<h3 class="wp-block-heading">Will regulation hurt or benefit euro-pegged stablecoins?</h3>



The ECB’s rate hikes come at a crossroads moment for European regulation towards crypto. The European Union is <a href="https://cms.blockworks.co/eu-negotiators-want-to-hammer-out-crypto-bill-this-month/" target="_blank" rel="noreferrer noopener">close to reaching a deal</a> on Markets in Crypto-Assets (MiCA), a landmark law that will shape crypto innovation in the Old Continent.&nbsp;



“It will without any doubt have a considerable impact on the Euro-stablecoin market, and I don&#8217;t expect most Euro stablecoin issuers to be able to navigate the complex MiCA requirements to the EU&#8217;s supervisor&#8217;s satisfaction,” said Hansen, adding however that “those who do, will benefit from greater institutional trust and adoption.”&nbsp;



Market players are still waiting to see MiCA’s final version. “It&#8217;s not set in stone yet, so we need to see its final draft,” said Scholz, whose company will be affected by the regulation.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“I&#8217;m a fan of regulation because the general idea is usually to protect the consumer, which is essential in finance.”&nbsp;</blockquote>



However, the devil might be in the details. “The question is then what kind of regulation do you have and how does it get implemented and affect businesses. If it&#8217;s well-thought-out, it allows for innovation to continue without being too constrained,” said Scholz, who not only shares a name with, but is in fact nephew to Germany’s chancellor Olaf Scholz.



Even the ECB, which is part of the financial supervisors in the eurozone, has its eye on a likely greater adoption of a euro stablecoin in the future.



“Potential risks triggered by more widespread stablecoin adoption can be managed through the existing Eurosystem’s oversight framework,” the ECB concludes, pointing to the expected MiCA regulation and international cooperation on the regulation of cryptoassets.



And in the meantime, as President Christine Lagarde <a href="https://twitter.com/paddi_hansen/status/1539284201052200963" target="_blank" rel="noreferrer noopener">recently said</a>, legislators may need to get to work on MiCA 2.0.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Rising Rates Could be a Game-changer for Euro Stablecoins Like Circle’s EUROC

<div id="highlights-block_62ab5325f8168" class="highlights">
 <ul>
 <li>Euro stablecoins hold insignificant value in today’s crypto markets, where USD-pegged stablecoins dominate</li>
 <li>EUROC is expected to be supported by major cryptoasset custodians and DeFi protocols</li>
 </ul>
 
</div>



Europe is bidding adieu to negative interest rates — and a euro-backed stablecoin is vying to be a prime beneficiary.&nbsp;



Seizing the development in monetary policy, USDC’s issuer, Circle, announced Thursday a new euro-backed stablecoin called EUROC, modeled after the second-largest dollar-pegged stablecoin, which currently has a market cap of $54.4 billion.&nbsp;



The plan is for Euro Coin to be backed 100% by euro-denominated reserves held in Silvergate Bank, regulated in North America, so it is redeemable 1:1 for euros. The reserves will grow based on supply and demand.&nbsp;



“Euro Coin expands opportunities for payments, on-chain FX, trade finance, commerce, and broader digital asset markets use-cases. The launch is symbolic of a shift in crypto markets towards greater and greater utility value from blockchain infrastructure,” Circle’s co-founder and CEO, Jeremy Allaire, <a href="https://twitter.com/jerallaire/status/1537421741521309696" target="_blank" rel="noreferrer noopener">wrote</a> in a tweet.&nbsp;



The euro, shared by 19 European Union member states, is the second-largest currency in the world, just behind the US dollar, but has an insignificant representation in stablecoins. So far in 2022, the eurozone’s currency lost 11% of its value against the dollar, and some analysts predict the two currencies will reach parity later this year.



Until now, only a few stablecoins are pegged to the euro, such as Tether’s EURt — a sister stablecoin to the largest dollar-backed issue, USDT — or Stasis’ EURS. Far from the scale of dollar-pegged stablecoins, EURt has a market cap of roughly $216.1 million and EURS’ market cap sits around $130 million, <a href="https://www.coingecko.com/en/categories/stablecoins" target="_blank" rel="noreferrer noopener">according to CoinGecko</a>.



Asked whether the launch is linked to the European Central Bank&#8217;s decision to raise the benchmark interest rate in July and September out of negative territory, a Circle spokesperson told Blockworks that the company “builds for the long term.”



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“There is a clear need for a credible, sound, and regulated euro-backed stablecoin to play a role in the future of finance,” the spokesperson said.</blockquote>



However, <a href="https://www.circle.com/en/euro-coin" target="_blank" rel="noreferrer noopener">on EUROC’s website</a>, Circles addresses the issue: “How do negative eurozone interest rates impact Euro Coin? Circle assumes the interest rate risk on Euro Coin reserves, just as we do with USDC,” the company says.&nbsp;



The new token will be available for everyone June 30. EUROC will launch on the Ethereum blockchain as an ERC-20 standard token — additional blockchains will be added later this year. USDC similarly began on Ethereum and has since <a href="https://www.circle.com/en/multichain-usdc" target="_blank" rel="noreferrer noopener">expanded</a> to eight other chains.



“A number of ecosystem leaders will support Euro Coin at launch, including Anchorage Digital, Binance.US, Bitstamp, Compound, Curve, CYBAVO, DFX, Fireblocks, FTX, Huobi Global, Ledger, MetaMask Institutional, and Uniswap Protocol,” the statement said.&nbsp;



EUROC reserves will be audited and attested monthly by Grant Thornton, a US independent auditor, starting in July.



Asked whether the stablecoin will be compliant with future European regulation once <a href="https://cms.blockworks.co/eu-negotiators-want-to-hammer-out-crypto-bill-this-month/" target="_blank" rel="noreferrer noopener">MiCA (Markets in Crypto-Assets)</a> framework is approved by the EU, a Circle spokesperson responded, saying that EUROC will be initially issued “within the US regulatory perimeter, with euro-denominated reserves held by US-regulated financial institutions.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Euro

Newsletter

Blockworks Research