Circle recently introduced the euro stablecoin EUROC. So now the dollar stablecoin USDC is no longer the only token of the American company. Now Bitvavo has made the token available.
Euro stablecoin now on Bitvavo
‘Euro Coin’ (EUROC) was already unveiled in June, but the token was actually not available anywhere. Bitvavo seems to be there early. The Dutch exchange revealed yesterday that the coin is available on the trading platform. The value must be equal to the euro, and its value, as with USDC, is fully secured by collateral, which in this case consists of euros and ‘Euro-denominated reserves’ for the entire market value.
The latest euro stablecoin from Circle, EUROC, is now available on Bitvavo.
EUROC is redeemable 1:1 for euros and enables easy euro transfers and access to DeFi via the Ethereum blockchain. pic.twitter.com/37cIseRE2x
— Bitvavo (@bitvavocom) August 25, 2022
By the latter we mean government bonds nominated in euros that are in principle risk-free. These assets are so-called ‘cash equivalents’ in jargon. In practice, institutions often invest in these if they want to put cash on the balance sheet. Circle therefore takes as little risk as possible with the collateral, unlike many other stablecoin issuers.
Cuntroubled approaches
For example, Tether and MakerDAO have been open about holding assets that are riskier, such as corporate bonds and even cryptocurrencies such as bitcoin (BTC) and ethereum (ETH). Tether recently stated that it now holds 58% less corporate bonds. However, that still doesn’t inspire much confidence. Circle takes a different approach with the reserves that are 100% risk-free.
But Circle’s approach is also controversial. The reserves are in fact a lot more centralized. When crypto mixer Tornado Cash was banned, Circle froze the wallets with USDC to comply with the government’s wishes. Not everyone agreed with the government’s approach, for example, there was a lot of protest after the arrest of one of the developers in Amsterdam.
MakerDAO takes an even riskier path. The organization of the DAI stablecoin wanted on purpose completely abandoned its link to the dollar when it was shocked by Circle’s decision to freeze wallets. DAI would then become a volatile cryptocurrency with ETH as collateral. You do not run this risk with Circle’s stablecoins.