The Big Whale: The Euro CoinVertible (EURCV) was initially designed for institutional players, so why offer it on a 'general public' platform?
Jean-Marc Stenger: Exchanges are a must as they represent the natural gateway to the crypto ecosystem. It was also a way of publicising our project to a wider target audience and gaining access to liquidity.
What prompted you to work with Bitstamp?
It's the culmination of discussions started last summer with several exchanges. Everything accelerated with this partner because their way of working corresponds to the requirements of the Société Générale Group (regulatory registrations, approvals, internal procedures, etc.). It was quite natural to get started with them.
Do you plan to list EURCV on other exchanges?
Yes, of course, Bitstamp won't be the only platform to list Euro CoinVertible. There won't be 10, but a few more, most likely. We will be making announcements in the coming months.
What conditions must exchanges wishing to list EURCV meet?
Firstly, they must do their KYC with Société Générale. This is not for everyone because many crypto platforms do not meet the standards required by our group. For example, we require a minimum level of regulatory registration in Europe. This eliminates all offshore structures. Secondly, we have demanding requirements in terms of internal KYC-AML arrangements.
Will exchange platforms at the heart of legal cases automatically be excluded?
There are a few platforms in discussion with legal authorities in France and abroad, but this is not something that prevents us from having discussions. Nevertheless, this is one of the things we analyse before choosing a partner. After that, I will never be the decision-maker on this aspect: it is the compliance departments that decide on KYC and they are independent of the business functions. They are the ones who decide whether the level is deemed acceptable for the group.
Your stablecoin has many restrictions on its use. Do you plan to make it more flexible?
We've had a policy of baby steps since we launched in April. We've seen how the project has been received, we've listened to feedback and so on. All this has enabled us to improve the smart contract. In fact, we modified it a few weeks ago to remove the need for SG-Forge to systematically validate transfers. From now on, all previously authorised entities can exchange EURCV without our intervention. Depending on how the listing goes, the amount outstanding and the needs of the market, we will study the possibility of relaxing the constraints again.
Will it be possible to withdraw EURCV from Bitstamp?
For the moment, no. EURCV will be available to Bitstamp customers for their trading operations, but they will not be able to withdraw it to external wallets. Our current line is clear: no player who has not been validated by SG-Forge can use EURCV on their personal wallet. But depending on the needs of the market, we reserve the right to evolve on this subject in the coming months.
How much is its capitalisation?
About €10 million to date. Although many people ask me if I expect an explosion in 2024, I prefer to remain cool. We don't know anything about that at the moment. But what I can tell you is that we are not developing this project to raise a few million euros. This project is designed, like all our banking products, to support billions.
What makes your stablecoin more solid than the others?
SG-Forge is a regulated subsidiary fully integrated into the Société Générale Group. In the legal sense, EURCV is a digital asset, but we have structured it as a traditional financial instrument. This means that token holders have direct recourse to the collateral and are not exposed to SG-Forge or Société Générale. The reserve is transparent, 100% cash and held in a Société Générale account. If there were a problem, any token holder could go to the fiduciary agent (a trust independent of Société Générale) to recover euros. To our knowledge, no stablecoin in the world offers this level of guarantee.
What is the EURCV business model? How do you make money with it?
There's nothing very mysterious about it, because like other stablecoins we make money from the interest generated by the reserve. The reserve can be left in cash or invested in riskier assets such as government bonds. Naturally, the return is not the same depending on which option you choose. For our part, we have decided to remain solely in cash for the time being. The interest rate is therefore around that of the European Central Bank.
What are the main uses of EURCV?
We promote it as a settlement asset in our traditional banking activities. For example, we launched a green bond earlier this week and EURCV was one of the most effective ways of subscribing to it. More generally, many players are in the process of digitising market activities and we are working to make EURCV the benchmark settlement asset. But we are not abandoning the crypto ecosystem, far from it. I believe that the crypto ecosystem needs more regulated, reliable and robust offerings. This is one of the conditions for the institutionalisation of this sector.
Does it have other functions?
Settlement is the first, but we are also presenting ourselves as an alternative to existing stablecoins and a more efficient solution for cross-border payments.
At the moment, who can ask you to create EURCV?
At the moment, there is only Bitstamp and Flowdesk (which we have chosen as our market maker). They can come and see us to create new tokens (mint) and do redemption. Others will gradually be added, but we don't intend to have a huge number.
You chose Flowdesk as your market maker. What was the reason for this?
Firstly, because this player met our compliance requirements. Secondly, the level of service was very good, as was the financial performance. Everything went very quickly with the legal department, which enabled us to close the deal quickly. But we'll soon be adding a second market maker to our system, and it won't be from the French ecosystem.
Could you launch stablecoins on other blockchains (currently Ethereum) and other currencies, such as the dollar?
In fact, that's one of the discussions we're having. It's been planned from the start, but it will depend on what our customers ask for. We're not going to launch new products without a sign from the market. Launching a dollar stablecoin is a possibility and we think there is a market for a product with a level of banking compliance.
By 30 June 2024, issuers of euro stablecoins will have to present an e-money or credit institution licence to continue operating. Do you have one of the two?
Every effort has been made to ensure that EURCV complies with the European MICA regulation that comes into force next year. To date, SG-Forge has neither of these two licences, but Societe Generale has them in France and other jurisdictions in Europe. Being part of a banking group, we can easily upgrade the token to meet regulatory requirements. Several options are on the table, but we have no doubt that we will be ready in six months' time.
