Euro stablecoin faces centralization criticism
Criticism has been directed at a new euro-pegged stablecoin released in France due to a decision to limit peer-to-peer transactions.
French bank Societe Generale-Forge (SGF) released the Ethereum-based stablecoin called EUR CoinVertible (EURCV) on April 20 which is available only to qualified institutional clients.
According to observers who have reviewed the smart contract code, ERC-20 transfers must first be approved by a centralized registrar — presumably one controlled by the bank — before the transaction is processed.
In a 20 April chirpingexplained pseudonym smart contract engineer “alephv.eth”:
“They coded it so they have to whitelist all users, process all user transfers and even process your ERC20 approvals before processing ‘transfer from’ lmao.”
She further mocked the code in a separate post, states it was a “radical commitment to inefficiency in the name of regulation”.
Nonfungible token (NFT) project founder “foobar” tweeted to his over 127,000 followers on April 20 that it’s “the worst code I’ve ever seen” and described the stablecoin as a “laughter.”
Crypto researcher Mason Versluis also tweeted that the code was “absolutely terrible” and suggested that the French bank “stop trying to weasel” into crypto.
Many others chimed in on the criticism, but Ether (ETH) investor Ryan Berckman offered a more neutral analysis.
He explained that many traditional financial firms such as SGF will take “baby steps” when moving into blockchain and digital assets:
“Of course, non-compliant, non-composable, allow-list style will be uncompetitive in the market. Baby steps, they come from tradfi, they will see that soon enough and switch to a USDC-style reject list.”
Berckman explained that SGF may also be wrong in its claim to be the first bank to launch an institutional stablecoin on a public blockchain. He pointed to the AUDN stablecoin minted by National Australia Bank (NAB) on Ethereum in March, which claimed to be the second bank to launch a stablecoin.
Regardless, Berckman expects more banks to follow suit in the coming months, and says he’s “confident” SGF won’t be the last bank to launch a stablecoin on a public network.
Related: Israel’s central bank says CBDC could be issued if the use of stablecoins increases
SGF’s stablecoin is not intended for public use – at least not initially.
EURCV is strictly available only to institutional clients onboarded by the bank through its Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures, according to the bank’s April 20 announcement.
Stablecoin is designed to bridge the gap between assets in traditional capital markets and the digital asset ecosystem.
A total of 10 million EURCV tokens were minted on Ethereum three days ago according to Ethereum explorer Etherscan. All 10 million tokens are held by one wallet address.
The stablecoin was launched against the backdrop of growing demand for a new means of settlement to process on-chain transactions.
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