Yesterday Banking Circle announced the launch of EURI, a MiCAR compliant Euro-pegged stablecoin. Banking Circle has a Luxembourg banking license but doesn’t serve retail clients directly. Instead, it provides correspondent banking and global payment services to companies, including fintechs such as Stripe and Airwallex. It says one of its aims is to is to enable 24/7 access to digital money and out-of-hours settlement.
Banking Circle claims to be the first MiCAR compliant stablecoin issued by a bank. Technically, that’s correct. Societe Generale FORGE (SocGen FORGE) has the EURCV stablecoin which it launched in 2023. SocGen FORGE received a license in France as an electronic money institution in time for MiCAR coming into force on 30 June this year. However, SocGen FORGE is not itself a bank. It is a subsidiary of a systemically important bank.
For EURI, Banking Circle will use a bankruptcy remote structure to hold the stablecoin reserves, with the EURI token available on the Ethereum blockchain and Binance’s BNB Smart Chain. The token will initially be available via the Binance crypto exchange and it partnered with Fireblocks to use its Tokenization Engine.
“Banking Circle can provide stablecoin users with the robust banking service and infrastructure they deserve and make stablecoins accessible to a wider audience wanting 24/7 access to instant payments,” said Daniel Lee, Head of Web 3, Banking Circle. He also hinted at future stablecoin launches and tokenized money.
Within Europe, Banking Circle can provide an integrated off and on-ramp for cryptocurrency and digital assets. It already serves the likes of crypto exchange Kraken. On the one hand, that could raise concerns that Banking Circle could overly focus on the digital assets sector, which didn’t turn out well for Silvergate or Signature Bank in the United States.
Euro stablecoin competition
However, several MiCAR regulated stablecoins already exist. MiCA regulations require stablecoin issuers to deposit at least 30% of their reserves at banks (60% for larger stablecoins), and avoid being too concentrated at a single bank. This means that all European stablecoin issuers will have pretty strong banking relationships to support on and off-ramping, even if they are not themselves a bank.
Nonetheless, Banking Circle will provide competition to the likes of BCB Group, which targets institutional digital asset on and off ramping. BCB has a French licence as an e-money institution and digital asset service provider. That gives it the right to issue a stablecoin.
There are already more than a dozen euro stablecoins (not all of them regulated so far), with a combined market capitalization of just over $300 million. That’s a tiny fraction of US dollar stablecoins, where the top two players alone account for more than $150 billion. Can Banking Circle make a dent?
