EUROC: almost a year after its launch, what is the outcome for Circle’s euro stablecoin?

What is Circle’s EUROC?

Launched almost a year ago, what happens to EUROC, Circle’s euro-backed stablecoin? As of this writing, the market capitalization of the latter exceeds $48 millionmuch less than the USDC, its big brother backed by the US dollar, which itself exceeds 29 billion US dollars.

However, more generally, dollar-backed stablecoins outperform the market compared to euro-backed ones. This is how Tether, the main competitor of Circle, dominates the 2 markets with its USDT (dollar) and its EURT (euro). However, Circle’s EUROC is much younger and already showing promise, as evidenced by its recent arrival on the Avalanche (AVAX) blockchain, symbolizing its multi-chain future.

As announced through its launch release in June 2022, Circle’s EUROC aims to foster the frictionless exchange of value within European markets. Just like the USDC, EUROC is insured at a 1:1 ratio with Euros placed in reserves managed by Circle at regulated banking institutions in the United States. On this subject, the Circle teams have also told us that they plan to move the EUROC reserves to Europe soon.

Around this time, Circle CEO Jeremy Allaire reported significant investor demand for a euro-backed stablecoin:

“Circle has set industry-leading standards for moving financial value across the internet with USDC. There is a clear market demand for a digital currency denominated in euros, the second most traded currency in the world after the US dollar. Together with USDC and Euro Coin, Circle is helping usher in a new era of fast, inexpensive, secure, and interoperable exchanges of value around the world. »

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One year after its creation, where is the EUROC of Circle?

As we can see from the graph below, Tether dominates the euro stablecoin market with its EURT (purple), but it should be noted that this one was created in 2016 and is therefore much older and therefore mechanically more democratized among investors. The second competitor of the EUROC remains the EURS issued by Statis, which exceeds 130 million dollars in market capitalization at the time of writing these lines.

Evolution of the 4 main euro stablecoins on Ethereum (ETH): EURT (purple), EURS (red), EUROC (green) and agEUR (grey)

Thus, we find that overall, euro stablecoins are a very small part of the stablecoin market, hovering around $500-600 million in market capitalization. For comparison, if the total of euro stablecoins were to represent one and the same stablecoin, the latter would not even enter the top 10 stablecoins backed by the US dollar in terms of market capitalization.

Furthermore, we can see that almost generally, euro stablecoins are issued by non-European entities, to name only Tether and Circle. Some 100% European solutions exist, however, such as the decentralized stablecoin agEUR issued by the French company Angle, but its market capitalization remains marginal with less than 20 million dollars.

As Hugo Bordet of the Association for the Development of Digital Assets (Adan) explained to us, centralized euro stablecoin issuers face significant regulatory constraints emanate from the European Central Bank (ECB) as well as from the MiCA regulations, which is not the case for players located across the Atlantic.

Faced with this observation, several questions arise: what place has the EUROC succeeded in taking within the euro stablecoin market, what should we expect from it for the next few years, what is Circle’s relationship with MiCA or even how company plans to expand its aura on new blockchains?

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Our questions to Circle regarding the development of EUROC

To answer all these questions and see more clearly, we directly interviewed several people from Circle.

Do you intend to extend EUROC to other blockchains?

“We are constantly in contact with developers who are building innovative applications across multiple blockchain ecosystems. We have introduced USDC on several blockchains to allow these applications, and therefore their end users, to benefit from the power of an open infrastructure for the digital dollar. We observed the same demand for EUROC. From cross-border transfers, regional payments and settlements, to currency risk exposure and hedging, developers across multiple ecosystems are demanding access to the digital euro infrastructure, and we look forward to continuing to expand EUROC to other blockchains in the future. » Joao Reginatto VP, Product Management for Circle

Almost a year has passed since the launch of EUROC, are you satisfied with the market cap, volume and implementation of EUROC (exchanges, DeFi protocol…)?

“We launched EUROC less than a year ago, and since then we’ve seen a steady increase in interest and adoption. The use cases for non-dollar-denominated stablecoins like EUROC are more embryonic, but also more specific. Over the past few months, we have seen the introduction of EUROC on major platforms such as Coinbase and Mercado Bitcoin in Brazil, despite a period of turmoil in the crypto markets. We are very optimistic about the combined potential that open digital currency platforms, such as EUROC and USDC, offer developers, allowing them to reimagine international financial services in a more efficient and accessible way. » Joao Reginatto VP, Product Management for Circle

Are you in discussion with European authorities about MiCA and stablecoin regulations?

“We have filed applications in France to become both an authorized electronic money institution (application for authorization as an electronic money institution) and a registered digital asset service provider (PSAN) (application for registration as a digital asset service provider). »

We remember that last March, the Minister Delegate in charge of the digital transition and telecommunications, Jean-Noël Barrot, had welcomed Circle’s decision to make France its headquarters in Europe. The EUROC having been partly designed for professionals and companies, the establishment of Circle in France will allow it to fully develop its activity and its products, including this stablecoin:

“France’s overall push for innovation-driven cryptocurrency regulation aligns closely with our vision for the future of the digital payments industry, which has made establishing our European regulatory hub in the country an obvious choice. The approvals granted under this scheme would allow Circle from on-shore EUROC, our euro-backed payment stablecoin, to begin the process of becoming a Markets in Crypto compliant e-money token. -Assets (MiCA). » Teana Baker-Taylor VP, Policy and Regulatory Strategy, EU/UK for Circle

We often observe that European investors deplore the market dominance of euro stablecoins by players located across the Atlantic, which means that their reserves are also located in the United States. As we have seen, this is also the case for EUROC. Circle has confirmed to us that following its establishment in France, it plans to host its euro reserves dedicated to EUROC in Europe.

Finally, concerning the reserves in question, Circle publishes monthly audits of the latter which are available on its site. As of this writing, €48.1 million of EUROC is outstanding, and Circle holds over €48.7 million in its designated reserves.

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Passionate about the world of decentralized finance and the novelties brought by Web 3.0, I write articles for Cryptoast to help make blockchain more accessible to everyone. Convinced that cryptocurrencies will change the future very soon.

Maximilien Prue

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