Introduction
France's Societe Generale is set to become the first major bank to launch a dollar-backed stablecoin, named "USD CoinVertible," through its digital asset subsidiary, SG-FORGE. This move marks a significant entry into the expanding market of dollar-pegged cryptocurrencies.Context
The USD CoinVertible will be issued on both the Ethereum and Solana blockchains, with public trading anticipated to commence in July. Stablecoins, a type of cryptocurrency usually pegged to traditional currencies like the dollar, facilitate large transactions over blockchain networks, bypassing conventional banking systems. The sector has rapidly grown, highlighted by a crypto company that has issued $155 billion of dollar-pegged tokens.Developments
SG-FORGE previously launched a euro-based stablecoin in 2023, but its adoption has been limited, with only 41.8 million euros ($47.62 million) in circulation. SocGen has categorized its stablecoins as e-money tokens, regulated under the European Union's landmark crypto regulation adopted this year. Tether, a major player in the market, operates under a license in the EU.Jean-Marc Stenger, CEO of SG-FORGE, emphasized the market's demand for a regulated dollar-based stablecoin, indicating the absence of other banking entities in this segment. He noted significant interest from corporates, financial institutions, and crypto exchanges, highlighting the pressing need for a well-regulated offering in the stablecoin arena.
Stablecoin issuers generally accept dollars from clients and provide crypto tokens in exchange, profiting by investing these dollar reserves into yield-bearing assets such as bonds. BNY will act as the custodian for SG-FORGE's reserves, initially held in a cash account before being diversified into other investments.
SG-FORGE has indicated various use cases for its token, including crypto trading, cross-border payments, and managing collateral and cash, with plans to list on multiple crypto exchanges. The subsidiary is currently onboarding "more than 15" crypto exchanges and brokers as clients.
In the United States, congressional efforts are underway to establish a regulatory framework for stablecoins, with Bank of America considering the launch of its own stablecoin. Additionally, several large banks are collaborating on a joint stablecoin initiative.
Tether remains the world's largest stablecoin issuer, while Circle, the second-largest, recently went public on the U.S. stock market. Regulations continue to caution that stablecoins could bridge gaps between mainstream finance and the more volatile crypto markets.