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Tribune Les Echos: A crypto-euro issued by an American giant, or how Europe is delegating its monetary sovereignty

The fall in cryptoasset prices is causing a lot of ink to flow and obscuring a piece of news that should, however, mobilise us all, much more than yet another stock market episode. On 16 June, the American company Circle – the world’s second largest issuer of stablecoins – announced the launch of EUROC, a cryptoasset backed by the euro. This announcement is all the more important as it highlights two major shortcomings: the lack of euro stablecoins available on the market and of European players to issue them. Circle is therefore stepping into this breach, following the world leader Tether which had already revealed its EURT in 2021.

I therefore call on public decision-makers. How many years and foreign crypto-euros will it take before Europe decides to encourage its champions? 

While some still consider cryptos to be volatile objects that cannot be trusted, stablecoins – whose value is maintained at a fixed parity by a currency – are emerging as a key instrument in this new economic universe. Between the unprecedented replication of payment methods in the digital world and the creation of new economic spaces such as disintermediated finance, they open the way to many uses that will make our daily lives easier.

Let’s not put all cryptos in the same basketLet’s not put all cryptos in the same basket

Let us not mistake the enemy. Let’s not confuse the issue. Not all stablecoins will collapse because Terra’s UST failure makes headlines.

Firstly, for technical reasons, because stability can be achieved in different ways. Some, like Cicle, put an equivalent number of currencies in reserve for each stablecoin issued. Others, like Terra, program an algorithm to maintain this stability.

For governance reasons on the other hand. Terra’s falsely decentralised decision-making mechanism is at the heart of the UST’s provisioning failure, which led to the collapse of its price. Other, more decentralised stablecoins have withstood this stock market crisis.

We cannot therefore hide behind this event to brush aside the consequences of Circle’s announcement and at the same time write off the future of our monetary sovereignty.

The European regulation that is about to be adopted cannot have a failing company as its only compass. Nor can it be the sole reflection of a conservatism that ultimately thwarts our common objective: to preserve Europe’s economic and monetary power. For although the European Central Bank is doing well to think about issuing a digital euro, its release is not expected for several years and the properties that will be devolved to it are far from the innovation and agility promoted by private players.

When will there be stablecoins by and for Europeans?

This observation should make it urgent to encourage the development of robust and secure companies that will meet the expectations of users in compliance with European policies. Better still, encouraging the development of stablecoins would enable us to establish the supremacy of the euro in international trade.

If we do not, we face a serious threat. The United States will issue the euros of the digital world in our place. More than 99% of stablecoins in circulation are already pegged to the dollar. American monetary hegemony is therefore being recreated in the Web3, and thus in the economy of tomorrow.

That is what is at stake. Cryptos are a fundamental building block of the emerging digital economy. A pillar of the Web3, their ambition is simple but powerful: to allow everyone to own and exchange value or scarcity (from money to art) online.

Yet Europe is not betting on euro stablecoins. This is evidenced by the draft European MiCA regulation, which is about to prohibit our companies from issuing euro stablecoins above a value of EUR 200 million and one million transactions per day. How then can we compete with dollar stablecoins, which circulate to the tune of $69 billion for the USDT and $55 billion for the USDC?

By choosing this path, we will be able to take pride in our regulation, which is certainly a precursor, but which will bury the hope of a renewed economic power for Europe on an international scale, particularly in the digital sector. Worse, as it stands, the regulation will fail to protect European citizens from potential failures of foreign players who will be able to provide them with euro stablecoins without constraint.

There is still time to react! In order to strengthen our sovereignty, protect users, act for the environment and against financial crime, there is one prerequisite: to have companies in Europe that will carry our values.

Read the article: https://www.lesechos.fr/idees-debats/cercle/opinion-cryptos-la-souverainete-europeenne-en-danger-1415292