In a blog post from February 2, Finnish FinTech company Membrane Finance announced that it launched the EUROe stablecoin, claiming to be the first and only stablecoin that is approved by EU regulators.
According to the post, the new EUROe stablecoin is a digital currency, pegged to the value of the Euro in a 1:1 ratio. The stablecoin is built on Ethereum, which makes it easily transactable on the network, with Membrane Finance adding that the projects would soon support other blockchains as well.
However, this is not the first Euro stablecoin, as in June, American company Circle Inc. issued its own stablecoin backed by the euro, although its Euro Coin (EUROC) was first held in custody by Silvergate Bank, a company subject to U.S. regulatory oversight.
Mechanism
The EUROe stablecoin turns out to be backed by “at least one fiat euro [...] In a European financial institution or bank, ring-fenced from Membrane Finance,” according to the company, with CEO Juha Viitala commenting that the new EU-regulated stablecoin would push more European citizens to enter cryptos and decentralized finance.
“Stablecoins are an essential part of the transition towards blockchain-based money infrastructure, and Europeans deserve to have a full-reserve euro stablecoin from the EU and regulated by an EU-based financial authority. EUROe hopefully brings more regular people to DeFi, who were previously unable to or worried about the volatility of cryptocurrencies.” Viitala added.
All transactions happen “on-chain”, meaning that speed, transparency, and security are guaranteed, while the Ethereum compatibility lets developers improve the stablecoin over time.
Membance also highlighted that the new stablecoin is already available for implementing smart contracts and transacted on Ethereum, with the company planning to launch EUROe on other blockchain projects like Solana, Polygon, and Arbitrum One.
A new stablecoin boom?
Stablecoins have been a much-debated topic since their inception, with fiat-backed digital currencies like Tether (USDT) becoming the third-largest crypto project to date, securing a market capitalization of over $68 billion and moving around $40 billion daily.
Meanwhile, Circle and Uniswap reported that blockchain-based foreign exchange can reduce remittance costs by as much as 80%.