Germany launches a Euro stablecoin on Stellar

Germany launches a Euro stablecoin on Stellar

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Recently there has been a  lot of discussions about whether countries are ready to switch to digital assets or not. The success of blockchain technology proved that it’s time to let paper money go away and switch to digital currencies which have so many advantages compared to traditional forms of money. However, everybody knows that cryptocurrency doesn’t really have a good reputation towards officials and this is why many countries get ready to issue their own digital currency which will be adjusted to their needs and requirements.

While some countries are aiming for developing central bank digital currency (CBDC) and trying to make digital money that would be officially controlled by the government, others believe that issuing stablecoins would be more beneficial. Stablecoin is a type of crypto that has a fixed price meaning that its market value depends on another stable asset. Unlike cryptocurrency which is an independent form of money from the national currency, stablecoin can be pegged to certain fiat currencies and can be exchanged in other currencies, such as USD or Euro. Therefore, stablecoin is a mix of crypto and national fiat money, and this is why countries hurry to make their own stablecoin. 

Germany’s attempts to launch Euro stablecoin

Bankhaus von der Heydt (BVDH), one of the oldest banks in Europe has announced that recently it collaborated with Bitbond, a German blockchain technology provider, and launched a Euro stablecoin on the Stellar network. The news is exciting for everyone interested in trading with digital assets because this form of cryptocurrency is already available for trading. According to Cointelegraph, the Euro stablecoin, which is referred to as the EURB is the first-ever digital currency which is launched directly by a national banking institute on the Stellar Network in the entire crypto market of Europe.

It’s completely regulated and supported by Euros which is very beneficial for banks and investors as it allows them to use cryptos without any risks. The new token was issued with the partnership of the provider of tokenization and digital asset custody technology Bitbond. It’s a peer-to-peer lending platform designed for BTC users. 

Regulations for new stablecoin

However, stablecoin doesn’t come without any regulations. It’s important to note that the EURB can’t be openly traded on exchanges at the moment because of some strict regulatory requirements. This is why local casinos aren’t so happy about the fact because they won’t have a chance to use the EURB as long as they don’t meet their regulatory requirements. This is why they believe that using Bitcoin and other well-examined cryptos is still more favorable for their business and that’s why they continue to add BTC for certain games and services.

But it’s not the case with some smaller countries. People have been arguing that the implementation of stablecoins would be easier in the gambling venues of smaller countries. One example can be Georgia, where the gambling industry is pretty much thriving at the moment, certain types of games that accept cryptos, are more popular than you can imagine. For example, blackjack has become so attractive after adding BTC to it, that the term “ბლექჯექი” which means blackjack in Georgian become one of the most searched words in Google Trends in this region. And there are other games as well which increased the number of players in Georgian online casinos just because Bitcoin was available for them. 

The popularity of Bitcoin in Georgia makes people believe that the implementation of stablecoins in this country would be a lot easier compared to some EU countries such as Germany because the regulatory approach about blockchain technology is not so strict in this country. However, nothing like this is planned for now and the country still has a long way to go in order to fully adopt blockchain technology.

But the federal government in Germany is more open to creating certain laws for the innovations in the blockchain. They try to revise the already existing regulatory approach by creating new laws about Euro stablecoin. Currently, Bitcoin is not considered legal tender in Germany but officials clearly know that German people already use it illegally which is why they try to make the EURB-related law more obvious. However,  it will definitely take a long time to fully integrate this stablecoin into the financial system. 

Details about the launch of EURB 

The new Euro stablecoin was issued by the BVDH which is a revolutionary event because founded in 1754, it’s one of the oldest banks operating in the EU region. The bank has been planning to launch the stablecoin for so long and this is why it finally partnered with Bitbond. The company offered the BVDH to hello in integrating the distributed ledger technology in its securitization business which is a huge step forwards for Germany. However, the German bank wouldn’t be able to launch stablecoin without the involvement of the Stellar Development Foundation. Steller makes it possible to create and trade digital representations of all forms of money and the company actually played a key role in the development of EURB as they provided consultation and technical support. 

Now according to the BVDH’s announcement, the developers of financial applications have an opportunity to use the token for making asset transfers on-chain. Bitbond made a platform that fully manages the security of stablecoin. Stellar and Bitbond have already been working together since 2019 and now Bankhaus von der Heydt starts to collaborate with them as well after exploring the DLT technology almost for a year. 

The Euro stablecoin will be used for ensuring the securitization process of the bank. Clients already have the possibility to use the newly launched digital asset to settle transfers on-chain. According to  Philipp Doppelhammer, the BVDH managing director, the stablecoin will be firstly used for making cross-border money transfers for blockchain payments. As he mentions, today it’s really hard to find a fully licensed bank that would support stablecoins which is why they are so delighted with the collaboration. Stablecoins usually carry potential counterparty risks and for this reason, banks don’t feel comfortable using stablecoins like Tether or USDC and prefer working with stablecoins issued by banks. 

But with the newly launched stablecoin things seem to be a little bit different. As a result, the Federal Financial Supervisory Authority, the German financial regulator, already gave the companies permission to issue this token on Stellar.

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