Introduction

As the European Union’s Markets in Crypto-Assets (MiCA) regulatory framework takes full effect on Dec. 30, 2024, financial institutions are increasingly exploring the potential of stablecoins. Designed to provide stability in the volatile crypto market, stablecoins are gaining traction among traditional banks and fintech firms seeking to bridge the gap between fiat currencies and blockchain technology. MiCA’s clear regulatory guidelines have opened new opportunities for these institutions within the European Union, shaping the regional financial landscape.

MiCA and Its Impact on Stablecoins

MiCA represents a comprehensive legal framework for crypto-assets in the European Union, aiming to enhance consumer protection, financial stability, and market transparency. It categorizes stablecoins into two main types: asset-referenced tokens (backed by multiple assets) and e-money tokens (pegged to a single fiat currency like the euro or US dollar).

The implementation of MiCA is being rolled out in phases. As of June 30, 2024, regulations for asset-referenced tokens and e-money tokens, such as USDC, became applicable. By Dec. 30, 2024, the full MiCA framework took effect, covering all crypto-assets and service providers. Firms must secure necessary authorizations and comply with operational standards by this deadline or face penalties or restrictions.

Under MiCA, stablecoin issuers must maintain sufficient reserves to ensure redemption at any time, adhere to rigorous governance and transparency standards, and meet operational requirements. One key provision prohibits issuers from offering interest or yield based on the duration of ownership, ensuring stablecoins are primarily used for transactions rather than as a store of value.

The framework, which became fully applicable on Dec. 30, 2024, requires service providers to secure authorizations and comply with operational standards or face penalties.

SG-Forge: Pioneering Bank-Issued Stablecoins

Societe Generale-FORGE (SG-Forge), a subsidiary of the Societe Generale Group specializing in blockchain and crypto-assets, has been instrumental in driving innovation in the stablecoin sector under regulatory compliance.

On July 8, 2024, Societe Generale-FORGE (SG-Forge) announced significant developments in its stablecoin project, EUR CoinVertible (EURCV). The company revealed that it had restructured EURCV into an Electronic-Money Token (EMT) to align with the MiCA regulations that became applicable for stablecoins on 30 June 2024. This restructuring coincided with SG-Forge obtaining Electronic Money Institution (EMI) approval from France’s Prudential Control and Resolution Authority (ACPR) on July 8, 2024, a milestone that enabled the stablecoin’s broader use.

Initially launched in April 2023 on the Ethereum blockchain for institutional clients, EURCV’s transition under MiCA has expanded its utility. The stablecoin can now be freely transferred without whitelisting restrictions, aligning with decentralized finance (DeFi) ecosystems. SG-Forge’s partnerships with market makers such as Flowdesk and Wintermute have further bolstered EURCV’s liquidity and trading conditions. Available on the Bitstamp platform, EURCV is positioned as a secure and regulated option for financial transactions and investments.

Other Financial Institutions Joining the Stablecoin Space

Beyond SG-Forge, other financial institutions are entering the stablecoin market, motivated by the profitability and utility of these digital assets. According to a report by Olga Kharif and Yizhu Wang for Bloomberg, several key players are exploring or planning stablecoin initiatives:

  • Oddo BHF and Revolut: These financial groups are developing Euro-denominated stablecoins, aiming to offer secure and regulated alternatives to existing options.

  • AllUnity (Deutsche Bank/DWS): This venture plans to launch its stablecoin in 2025, further expanding the European stablecoin landscape.

  • BBVA and Visa Collaboration: Visa has launched a tokenization network enabling banks to issue stablecoins, with BBVA set to pilot a stablecoin project in 2025. This partnership highlights the growing role of fintech firms in facilitating stablecoin adoption.

  • Standard Chartered: In collaboration with blockchain gaming conglomerate Animoca Brands and Hong Kong Telecommunications, Standard Chartered is developing an HKD-denominated stablecoin. Selected by the Hong Kong Monetary Authority for its experimental program, the stablecoin is expected to go live in 2025.

These initiatives demonstrate the increasing interest in stablecoins as tools for cross-border payments, financial settlements, and integration into DeFi platforms within specific regulatory frameworks. Visa’s role highlights stablecoins’ potential to connect traditional banking and blockchain systems.

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