Falling prices for cryptocurrency assets are causing leaks of ink and hiding news that, however, should mobilize all of us, much more than the next episode of the stock market. On June 16, US-based Circle, the world’s second-largest issuer of stable cryptocurrencies, announced the launch of EUROC, a euro-backed cryptocurrency.
The announcement, which is all the more important because it highlights two main shortcomings: the lack of a stablecoin euro market and European players to issue them. Therefore, Circle is in a hurry for this violation, following the world leader Tether, who has already announced its EURT in 2021. That’s why I appeal to decision makers. How many years and foreign crypto-euros will it take before Europe decides to encourage its champions?
As some still limit cryptocurrencies to volatile, unreliable objects, stablecoins, which are maintained at a fixed parity through currency, are becoming a key tool in this new economic universe. Between the unprecedented copy of digital means of payment and the creation of new economic spaces, such as financing without intermediaries, they open the way to many applications that will make our daily lives easier.
Let’s not pity the enemy. Let’s stop with amalgam. Not all stablecoins fail because Terra UST crashes in the headlines. First, for technical reasons, because their stability can be achieved in different ways. Some, like Circle, put an equivalent amount of currency in reserve for each stablecoin issued. Others, like Terra, program an algorithm to maintain this stability.
On the other hand, for management reasons. Terra’s erroneously decentralized decision-making mechanism underpins the lack of provision in the UST, which has led to its price collapse. Other more decentralized stablecoins have weathered this stock market crisis. Therefore, we cannot hide behind this event in order to ignore the consequences of the Circle announcement and at the same time write off the future of our monetary sovereignty.
The urgency of growing powerful enterprises
The European regulations that need to be adopted cannot be based solely on a failed company. It will not be the only reflection of conservatism, which ultimately runs counter to our common goal: to preserve Europe’s economic and monetary power. Because if the European Central Bank thinks well about the digital euro, it is expected to come out in a few years, and the properties that will be passed on to it are far from the innovation and speed that private entities are promoting.
This observation should confirm the urgency of promoting the development of reliable and secure companies that meet the expectations of users in accordance with European policy. Better yet, encouraging the development of stablecoins would allow us to establish the advantage of the euro in international trade.
Otherwise, we pose a serious threat. The United States will produce the euro of the digital world instead of us. However, more than 99% of stablecoin in circulation is pegged to the dollar. Thus, American monetary hegemony is in the process of being reproduced in the Web3 and, consequently, in the economy of tomorrow. That’s what’s at stake. Crypto is the fundamental building block of the emerging digital economy. Pillar Web3, their ambitions are simple but powerful: to allow everyone to own and share value or rarity online (from coins to works of art).
Protect citizens from failure
However, Europe is not betting on euro stablecoins. This is evidenced by the draft European regulation MiCA, which is going to ban our companies from issuing euro stablecoins worth more than 200 million euros and one million transactions per day. How then to compete with dollar stablecoins, which circulate up to 69 billion dollars for USDT and 55 billion for USDC.
By choosing this path, we can be proud of our rules, which are certainly innovative, but which will bury the hope of restoring Europe’s economic strength internationally, particularly in the digital sector. What’s worse is that in this case, the rules will not protect European citizens from the potential failures of foreign players, who will be able to provide them with stable euro coins without restrictions.
There is still time to react! To strengthen our sovereignty, protect users, act for the environment and against financial crime, there is a precondition: to have companies in Europe that will carry our values.
Faustin Flere is the President and Managing Director of ADAN