A stablecoin is a cryptocurrency that is pegged to a fiat currency. EUROe is a euro-backed stablecoin developed in Finland. EUROe was launched on the Ethereum blockchain as an ERC20 token.
EUROe’s strength is its status as a regulated stablecoin in the EU. A euro-backed stablecoin is an exciting option for various reasons. EUROe-stablecoin is not yet available on centralized cryptocurrency exchanges. The future of EUROe stablecoin looks bright!
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What is a stablecoin?
A stablecoin is a cryptocurrency that is pegged to a fiat currency. The largest and best-known stablecoins are all pegged to the US dollar. Other fiat currencies, such as the euro, play only a marginal role in the stablecoin market.
The table below lists the five largest stablecoins by market cap. They are all backed by the US dollar.
| Stablecoin | Ticker | Market cap |
|---|---|---|
| Tether | USDT | $110 billion |
| USD Coin | USDC | $34 billion |
| Dai | DAI | $5,5 billion |
| First Digital USD | FDUSD | $3.6 billion |
| Ethena USD | USDe | $2.3 billion |
Centralized stablecoins dominate the market. This refers to stablecoins that have a technology company behind them. This company controls the stablecoin issuance and its collateral. These days, stablecoin issuers report monthly or quarterly about the status of the collateral.
Stablecoins backed by the U.S. dollar must have a reserve of U.S. dollars equal to the number of tokens in circulation. In practice, stablecoin issuers deposit most of the collateral in US Treasuries or other low-risk assets to earn yield.
DAI stands out from the large stablecoins because it is backed by crypto. DAI’s collateral was initially Ether (ETH), but nowadays, a significant part consists of other cryptocurrencies and stablecoins.
Since crypto prices fluctuate widely, DAI is over-collateralized. This means that the dollar value of the collateralized cryptos exceeds the market cap of DAI tokens. DAI has survived several price crashes in the crypto market and kept its dollar peg in the long run.
We have also published an in-depth stablecoin guide that comprehensively covers the subject.
What is EUROe?
EUROe is a euro-backed stablecoin developed in Finland. EUROe was launched by the Finnish tech company Membrane Finance. It is part of the Equilibrium Group.
EUROe is not the first euro-backed stablecoin on the market. Circle, which also runs USDC, has previously launched the EUROC stablecoin. There is also a euro version of Tether. The market for euro-based stablecoins is still in its infancy.
Membrane Finance differs from other issuers because the company has been granted the EU’s first license to create a euro-backed stablecoin. The license was given by the Finnish Financial Supervisory Authority (FIN-FSA).
EUROe was officially announced in December 2022.
Membrane Finance announces EMI licence from Fin-FSA and a €2M seed round to launch a Euro-backed stablecoin, EUROe.https://t.co/AxXyrRwXeB
— EUROe (@EUROemoney) December 8, 2022
EUROe also meets the requirements of the EU’s upcoming crypto regulation, which uses the abbreviation MiCa. The EU’s new crypto regulations will be approved in early 2023, resulting in a transition period of approximately one and a half years. Crypto businesses in the EU region will comply with the new regulations in late 2024.
Upcoming crypto regulations will set new requirements for the stablecoin issuers. EUROe is the only euro-backed stablecoin on the market that complies with the new EU regulations. Time will tell what kind of competition will emerge.
It is essential to understand that from a regulatory point of view, EUROe is electronic money – not cryptocurrency (virtual currency). All stablecoins issued in the EU must eventually apply for similar status. In this respect, EUROe has a significant lead over competing alternatives.
EUROe works technically like the best-known stablecoins on the market. It circulates in the Ethereum and Polygon networks and can be stored in the same crypto wallets as USDC, USDT, and DAI.
Membrane Finance manages EUROe and invests a certain percentage of collateral in low-risk and highly regulated investments. In practice, these mean government bonds in the EU area.
The technology behind EUROe
EUROe was launched on the Ethereum blockchain as an ERC20 token. EUROe became available for trading on Uniswap in February 2023.
Membrane Finance aims to bring EUROe to other smart contract platforms as well. The first step forward was seen in March 2023, when EUROe was launched on Polygon. Polygon is a sidechain of Ethereum, and these blockchains are technically linked.
EUROe is now available on Polygon!@0xPolygon enables faster & cheaper euro-denominated transactions with EUROe.
Learn more about the integration on our blog at https://t.co/F7U5cxOCPW, and read the thread to see how you can get started with $EUROe on Polygon today!
— EUROe (@EUROemoney) March 22, 2023
In the future, EUROe will also expand to other EVM-compatible blockchains, such as Avalanche and BNB Chain and Ethereum’s Layer 2 solutions Arbitrum and Optimism. We were told that that Arbitrum is next on the list. We will probably see this expansion as early as April.
There is a developer portal for EUROe-stablecoin at dev.euroe.com. It contains detailed information about EUROe’s technical features for application developers.
EUROe is easy for the average crypto investor to use. It can be stored in MetaMask, Trust Wallet, and other wallets that support Ethereum and Polygon platform tokens.
The impact of the US on the stablecoin market
EUROe’s strength is its status as a regulated stablecoin in the EU. The regulations of both the EU and the United States have changed significantly. EUROe is the only operator on the market with a stamp of approval from EU regulators.
In the future, only stablecoins regulated in the EU can be offered to European customers. How many of the dollar-based stablecoins will get EU approval? At the moment, only USDC seems like a strong candidate.
Europeans’ interest in euro-based stablecoins is also growing for other reasons. In early 2023, US regulators started a war on the crypto sector. The situation is putting pressure on companies and impacting their relationships with banks. The conditions are becoming increasingly challenging for industry operators, causing them difficulties.
The fall of Silicon Valley Bank led to a drop in the USDC price because a good eight percent of the stablecoin’s collateral was in SVB. As a result, many industry professionals have switched their USDC investments to bitcoins and other stablecoins.
The SEC also attacked Paxos, which is behind the BUSD stablecoin, and forced the company to remove the stablecoin from the market. The SEC attacked the publicly traded crypto exchange Coinbase in the most recent example. The situation in the United States seems to be developing in a worse direction every day.
1/ Today Coinbase received a Wells notice from the SEC focused on staking and asset listings. A Wells notice typically precedes an enforcement action.
— Brian Armstrong (@brian_armstrong) March 22, 2023
In recent years, the United States has been the leading crypto country. The US dollar is also by far the most significant fiat currency, leading to the popularity of USD-based stablecoins.
The development of 2023 has made more and more investors look for other options. The EU’s new regulation and sensible approach to the crypto sector will help euro-based stablecoins increase their market share significantly.
Why to use EUROe?
A euro-backed stablecoin is an exciting option for various reasons. As EUROe is a stablecoin, it does not offer investors the potential for appreciation like other cryptos. There are other reasons for holding EUROe, such as:
- Utilization of DeFi services
- P2P transactions and savings
- Elimination of currency risk
- Avoiding US regulatory risk
- Keeping funds in your crypto wallet
DeFi apps are the primary use of stablecoins. Lending services, in particular, revolve very strongly around stablecoins. Stablecoins are borrowed and offered as collateral for tens of billions of dollars.
The US dollar dominates the DeFi market, but the situation may change in the coming years. US regulators’ hostile attitude toward cryptos may drive investors away from dollars, and the euro-based DeFi market will probably grow a lot in the coming years.
Below is a picture of the Aave lending service. It could be a natural growth platform for the adoption of EUROe.
EUROe works well in P2P transactions. Currency transfers and savings are among the most essential uses of stablecoins, especially in poor countries. Due to Bitcoin’s volatility, many people want to save money and pay using stablecoins. The dollar dominates this sector, but the euro (and other fiat currencies) will soon offer new options.
European investors have preferred dollar-based stablecoins due to the weak performance of the euro. EUROe helps eliminate currency risk and regulatory risk. EUROe can be seen as a safer alternative to dollar-based stable currencies in the current regulatory environment.
There is no reason to forget one of cryptocurrencies’ most essential features: storing assets in a digital wallet outside the banking system. With EUROe, you can store de facto euros in your crypto wallet and send them to anyone anytime.
How to buy EUROe
EUROe-stablecoin is not yet available on centralized cryptocurrency exchanges. Northcrypto’s COO Miikka Laukkanen told AboutBitcoin.io that the company does have plans for EUROe but has not yet revealed the content or schedule of the plans in more detail.
Another Finnish crypto exchange, Coinmotion, is also watching EUROe. Partner Manager Pessi Peura commented that Coinmotion observes the development of EUROe with interest and maps the demand for the currency.
Currently, EUROe can be bought on decentralized exchanges such as Uniswap. We will update this part of the article when we receive news about EUROe’s crypto exchange listings.
The future of EUROe
The future of EUROe stablecoin looks bright! This stablecoin meets regulators’ requirements and is ready to conquer the European market.
The main uses of stablecoins are currently in the DeFi apps, currency transfers, and savings. They are mainly used as collateral and as the subject of loans in decentralized lending services. The operation of the entire DeFi sector would be significantly more difficult if stablecoins did not exist.
The EU’s upcoming MiCa regulation will bring long-needed stability and clarity to the crypto industry in Europe. At the same time, the United States is waging an outright war against the crypto sector. We might see a significant shift from dollars to euros in the stablecoin market.
The stablecoin market is around $130 billion and growing constantly. The share of euro-based stable currencies is only fractions of a percent. If the EUROe managed to get even a few percent of the market, it would become a significant player in the industry.