SocGen subsidiary is first systemic bank to issue stablecoin on public blockchain – Ledger Insights

by Arthur · April 20, 2023

Today, Societe Generale Forge (SocGen Forge) unveiled the EURCV stablecoin (EUR CoinVertible), which will initially be issued on the public blockchain Ethereum with plans for other blockchains as well. This is the first public blockchain stablecoin issued by a subsidiary of a global systemically important bank (G-SIB).

SocGen Forge has been at the forefront of blockchain for some time, providing the infrastructure for the first blockchain bond issued by the European Investment Bank (EIB) on Ethereum. Like that bond, the stablecoin uses Forge’s CAST framework for tokenization.

The motivation for the issuance includes a robust means of settlement for on-chain transactions. The DLT Pilot Regime is now in effect, although no major projects have yet been unveiled. Other customer needs SocGen Forge addresses include corporate treasury, on-chain liquidity funding and a margin call resource.

In terms of jurisdiction, it is a French regulated digital asset and the company received its digital asset license last year. On the one hand, it has many of the features you would expect from a conservatively regulated institution. Access to stablecoin is limited to investors who have been through SocGen KYC and AML procedures. And the means of support are completely separate. If SocGen does not wish to purchase stablecoins from the holders, they can be redeemed or converted into collateral.

However, the security is of a lower quality than the reserves of USDC or Paxos dollar stablecoins. Collateral backing the EURCV is cash in a bank with at least the creditworthiness of SocGen and short-term securities with an unsecured credit rating equivalent to SocGen or better. In contrast, USDC and Paxos only invest in bank deposits and government bonds or government repos.

SocGen Forge plans to have the stablecoin listed on digital asset exchanges.

“Digital assets with stabilization mechanisms – i.e. stablecoins – built under a robust banking quality structure will be a key element to increase trust and confidence in the native crypto ecosystem,” said Jean-Marc Stenger, CEO of SG-FORGE. “This issuance is an important step in Societe Generale–FORGE’s roadmap to deliver innovative solutions to its clients, whether real money institutions and companies or entities in the crypto industry, and to facilitate the emergence of new market infrastructures based on blockchain technology.”

More to follow.