But now this crypto-euro is controlled by an American group. “Centralized stablecoins are regulated by the institutions of the country in which they are based. In the case of Circle, it is the United States. If the US regulator tomorrow tells Circle ‘Block this list of crypto-addresses belonging to Europeans’, they can.”warns Claire Balva.
Crypto exchanges (Coinhouse, Binance, Coinbase) can already freeze some users’ accounts, just as banks can. In March, Coinbase also blocked 25,000 accounts from Russia. But in this new world, cryptocurrencies can even censor their users if they are run by companies. Circle, for its part, also confirms its ability to do so: “Circle and the Center Consortium only blocks addresses when we are legally required to do so. This includes legal requests as well as compliance with sanctions in accordance with U.S. and international rules.”
The beginning of European stable coins
If dependence on a cryptocurrency administered abroad is questionable, European stack coins exist, but they are still in their infancy for two reasons:
It is very expensive to develop a large stable cryptocurrency. “When you have to find 50 billion, it’s easier in the US and in addition, the big stack coins are generally created by exchange platforms, which are not very present and not very powerful in Europe,” explains the expert from KPMG. Among these giants that have created their own crypto-dollars is Coinbase, partly at the origin of the USDC, or Binance and its BUSD. Already in 2021, a French start-up has tried to create a euro stablecoin: Lugh. Although supported by Casino, its EURL is currently listed on only 4 trading platforms and has only 10 million euros in capitalization due to lack of funding.
- The caution of regulators
According to Claire Balva, “central banks are not at all enthusiastic about the idea of seeing currencies managed by private actors”. The collapse of Blockchain Terra and its stablecoin UST (Luna), which caused many savers to lose money in May last year, confirmed in particular the French and European authorities in their desire to control these digital assets. The collapse of this “satblecoin” cryptocurrency in a few days in early May after would have led to the destruction of $ 50 billion.
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This caution has had an impact on European entrepreneurs. “It is difficult to start creating a stable coin because we are afraid of getting a big slap from the French regulators [Autorité des marchés financiers (AMF), Autorité de contrôle prudentiel et de résolution (ACPR)]. It’s also a bit cultural. EIn Europe we are waiting to see what the regulator will ask for, in the US they do and then they comply“, says Owen Simonin, the founder of Just Mining, an investment company in cryptocurrency. An unpleasant situation for European start-ups, which should be clarified with the future European regulation Market in crypto assets (MiCA), which has just entered into a preliminary agreement on., found, this Thursday, June 30th.
Future MiCA regulation
This European initiative plans to regulate web 3 (the internet using cryptocurrencies and NFTs, blockchain ownership), and in particular the use of stablecoins. This regulation seeks to oblige the companies that manage them to have a reserve that guarantees their assets 100%: a good point for the euro currency therefore. The Council of the European Union also states in a press release that “all stack coins will be monitored by the European Banking Authority (EBA), as the issuer’s presence in the EU is a precondition for any issue”. Circle must therefore be approved by the EU in order to offer its assets on the old continent, just like Binance a few months ago.
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This decision would move away from the scenario of a dependence on the United States; but still raises the question of its impact on European entrepreneurs, according to Pierre Person, a former deputy for Paris who worked on this topic: “MiCA will just prevent small European players from developing by having strong control over them, which will favor the big players who are not in Europe “. A view not shared by the economist and director of the Rousseau Institute, Nicolas Dufrêne, who, on the contrary, believes that “the fact of paving the way for truly solid stack coins will be a good example of bringing reliable players forward” while dampening it. the expansion of large unregulated stack coins.
This new regulation could allow European stack coins, such as Lugh’s EURL (French cryptocurrency, a result of the collaboration between Casino, Société Générale and several other companies) to be approved and developed. “When we were set up a year ago, we wanted to capitalize on a reliable stablecoin with a good reputation with ACPR, so we took the time to offer a crypto-euro 100% guaranteed by funds at Société Générale and audited by Deloitte every month “, welcomes Alban Vendeuvre, its founder, Hour. of glory for our crypto It is still unknown what the final text of MiCA, which is yet to be approved by the Member States and the European Parliament, will provide detailed information on these European projects.
How to use stack coins
Stablecoins are pillars of web 3. A stablecoin is a digital currency, backed by a “stable” value, refuge, such as the dollar or the euro. Stablecoins are therefore considered to be less volatile than other cryptocurrencies. “For many Europeans, having a euro value is more interesting, it speaks more to us, and then it allows investors not to suffer from the exchange rate between the euro and the dollar,” assures Owen Simonin, founder of that cryptocurrency investment company Only mining. The euro has actually lost 14.7% against the dollar since June 1, 2021, and the reverse is also possible.
It is already possible to invest in real estate, video games or works of art, thanks to blockchain, by using these stable assets (stablecoins). But while stablecoins mimic the prices of physical currencies, they are not as safe as euros and dollars, as they are based on companies or technologies that could collapse, like the UST of Terra, in early May 2022.