Société Générale to become first big bank to list a stablecoin

Société Générale is set to launch its own stablecoin on a cryptocurrency exchange, becoming the first big bank to offer digital tokens tracking the price of hard currencies to a wide range of investors.

France’s third-largest bank on Wednesday will debut trading of its own stablecoin, called EUR CoinVertible, on Bitstamp, an exchange based in Luxembourg.

The move marks a significant step for a traditional financial institution into a part of cryptocurrency trading currently dominated by specialist digital assets firms. Stablecoins are facing increasing attention from regulators, with the UK last month setting out proposals to bring the tokens into the real economy.

Stablecoins are a form of digital cash that track sovereign currencies and make it easier for crypto traders to buy and sell in the market. The majority of trading in crypto such as bitcoin is done through stablecoins tied to the US dollar.

The $130bn market is dominated by British Virgin Islands-registered Tether and the US’s Circle, which have faced questions over audits of the reserves that back their tokens. SocGen said EUR CoinVertible would be fully backed by euros.

“The crypto ecosystem is highly concentrated on a few existing stablecoins, 90 per cent denominated in US dollars . . . we definitely think that there is a place for a bank in this field and there is a place for a euro [denominated] stablecoin,” Jean-Marc Stenger, chief executive of SocGen Forge, the bank’s digital assets unit, told the Financial Times.

While some large investment banks such as JPMorgan have their own stablecoins, they are only available to small groups of institutional clients. In contrast, SocGen’s stablecoin will be widely available for trading.

Stenger said the bank hoped its stablecoin would be used to settle trades in digital bonds, funds and other assets as traditional financial institutions explore digital ledgers.

“The best way to channel [investors’] interest is to grow in the usual route and venue which you use in the crypto industry, which is to have your product listed on a crypto exchange,” he said.

Mica, the EU’s flagship digital assets regulation, comes into force next year and Stenger said that SocGen’s stablecoin is built to align with the rules, adding that “very few stablecoins are compliant with Mica”.

Asset managers and banks are increasingly exploring tokenising assets such as bonds and funds, which require digital cash, but the market is still small. In a development welcomed by the industry, the UK Treasury and Financial Conduct Authority last month gave fund managers the green light to tokenise their funds, as long as they contain “mainstream” assets.

On Monday, Axa Investment Managers invested in a digital green bond using SocGen’s stablecoin. 

Stenger said that the stablecoin had been built to be able to be used on different platforms and between various financial services players.

He added that token holders would face no exposure risk to the French bank itself, and have “direct recourse on the collateral asset of the stablecoin”, as the euros would be held in a trust managed by a third party.

“It’s open to anyone who wants to use it, either operations on our own platform or other platforms,” he added.