Euro

German asset manager DWS joins Galaxy to issue euro stablecoin

AllUnity, a new joint venture by DWS, Galaxy, and Flow Traders, plans to issue the euro stablecoin on all major public permissionless L1s and L2s, as well as DeFi use cases.

Deutsche Bank’s asset management arm, DWS, is forming a new venture with Michael Novogratz’s Galaxy Digital and Flow Traders to jointly issue a euro-denominated stablecoin.

DWS Group officially announced on Dec. 13 the plan to form AllUnity as part of a new partnership between DWS, Flow Traders, and Galaxy to launch a “fully collateralized” euro stablecoin.

AllUnity’s operations will be regulated by the German Federal Financial Supervisory Authority, or BaFin, the announcement notes. AllUnity’s longer-term focus will be to accelerate mass adoption of digital assets and tokenization.

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France’s 3rd-largest bank, Société Générale, launches euro-pegged stablecoin

The euro-pegged stablecoin will be the first of its kind in the region and will be available to the bank’s customer base for trading use.

Société Générale, France’s third-largest bank, has debuted its native euro-pegged stablecoin, making it one of the first European banking giants to venture into the stablecoin market.

The EUR CoinVertible (EURCV) stablecoin will debut on the Luxembourg-based Bitstamp crypto exchange, the Financial Times reported. EURCV will be fully backed by the euro, allowing bank customers to participate in the digital asset market. The asset will be available to a broad customer base and can be used for trading.

Jean-Marc Stenger, the CEO of Société Générale Forge, stated that the new stablecoin highlights the bank’s role in the evolving crypto domain and stressed the necessity for a stablecoin denominated in euro.

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What’s next for EU’s crypto industry as European Parliament passes MiCA?

What is the potential impact of MiCA on the EU crypto and blockchain market, and what other regulations can be expected for this rapidly evolving industry?

On April 20, the European Parliament voted to pass the Markets in Crypto-Assets (MiCA) regulation, the European Union’s main legislative proposal to oversee the crypto industry in its member countries. 

The MiCA regulation is a significant development for the crypto industry in the European Union. Prior to MiCA, crypto companies had to comply with 27 different regulatory frameworks across the EU member states, with Germany or France being costly and burdensome, for example.

Under MiCA, however, EU-wide regulations will apply, allowing companies to operate throughout the entire EU crypto market with a MiCA license granted in one country. This will increase the competitiveness of EU startups and may result in them gaining market share from unregulated competitors.

MiCA will increase the EU’s competitiveness

Moreover, MiCA could encourage more institutional adoption and activity in the EU crypto and blockchain market. Patrick Hansen, director of EU strategy and policy at stablecoin issuer Circle, told Cointelegraph that MiCA will enable European crypto firms to scale and grow faster, allowing licensed companies to offer their services throughout the world’s largest single market, with roughly 450 million people:

“The legal clarity will also foster innovation amongst financial institutions that have been previously hesitant to launch products and services due to regulatory uncertainty. Additionally, as MiCA is the first comprehensive regulatory framework for crypto assets from a major jurisdiction in the world, it is likely to attract considerable foreign capital and talent to the region.”

For Moritz Schildt, a board member of the Hanseatic Blockchain Institute and the German Blockchain Association, the biggest advantage of MiCA is that “it will come into force already this year,” giving the EU a chance to provide a unified regulatory framework for crypto assets and related providers.

Magazine: Here’s how Ethereum’s ZK-rollups can become interoperable

Creating a regulatory framework for a technology that sees new developments and outgrowths practically every month and evolves as dynamically as the tokenization of investment opportunities is “very challenging.”

“It should come as no surprise, therefore, that some regulations are not yet optimal and that questions about concrete applications remain unanswered,” Schildt said, adding that with MiCA, Europe has the opportunity to position itself “as a location for innovation and quality.”

Unregulated companies out of the EU crypto market

Peter Grosskopf, co-founder of decentralized finance (DeFi) project Unstoppable Finance, is also convinced that MiCA will benefit the EU crypto and blockchain market. First, companies from outside Europe will have to register with a company in the EU, so there is a “direct impact on job creation and tax payments.”

Second, many jurisdictions take an overly strict approach to regulating crypto. For example, “the U.S. does regulation by enforcement.” Compared with other regions, the EU will become “a safe space for the industry as a whole, and innovators from around the world will start to build their businesses here,” Grosskopf said.

Stefan Berger also noted that the United States is currently cracking down on the crypto sector. According to the German politician and European Union Parliament rapporteur for MiCA, the European crypto asset industry has regulatory clarity that the United States doesn’t, and it would be wise for U.S. lawmakers to take a cue from MiCA:

“For me, the biggest advantage is that we create trust, which is a crucial booster, especially for young technologies like blockchain. I expect regulation to become a global standard-setter over time. A global MiCA would be desirable at some point.”

NFT regulation unavoidable

Through MiCA, European policymakers are trying to create a reliable framework that builds trust through legal certainty. This includes a uniform classification of assets and the requirement for coin issuers to provide a white paper that discloses all relevant information about the coins, such as their energy consumption and environmental impact.

In addition, MiCA will ensure that every new token is reviewed for approval to check that the business model does not threaten the stability of the cryptocurrency, which creates more transparency for investors.

But the crypto and blockchain sector is constantly evolving. “Tokenization is not hype and will become an integral part of our lives and financial world,” said Berger. More and more business models are emerging based on nonfungible tokens (NFTs), for example, which have been largely exempt from MiCA. (The new regulation will only address crypto-asset service providers that offer services for NFTs).

But according to Berger, NFTs are next on the docket, with European lawmakers looking at what type of regulation would benefit the industry and consumers.

Schildt also expects further regulations on NFTs relatively soon. “We should reconsider the traditional classification of investment products.” According to the expert, in the future, investments “that were previously considered ‘art collections,’ we will also qualify as capital investments.”

DeFi is a hot topic in European policy making

Some aspects of MiCA have yet to be defined through upcoming technical standards and guidelines.

For example, what are the specific liquidity requirements for electronic money token reserves? EU regulators will develop these standards over the next 12 to 18 months, and “the practical success of MiCA will largely depend on this implementation work — also referred to as Level 2 legislation,” Circle’s Hansen said.

Hansen further noted that, beyond MiCA, EU institutions are finalizing a new Anti-Money Laundering (AML) rulebook that will be “critical for crypto firms.”

Another critical review is that of PSD2, the EU’s main payments directive, which will also significantly impact crypto firms.

And finally, in about 18 months, the European Commission will publish a detailed report on DeFi and may take further legislative steps to regulate the space. “Brussels prides itself on being a global regulatory leader, and MiCA is just the first of many steps to come,” said Hansen.

Unstoppable Finance’s Grosskopf also expects DeFi regulation to become a hot topic following the next round of elections in Europe, as MiCA will not apply to “crypto-asset services provided in a fully decentralised manner without any intermediary.”

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“I think it’s important to be proactive and start thinking about how to regulate DeFi as early as possible in order to influence the process,” he said, stating that the new AML regulation is currently under discussion and will most likely become a reality before MiCA.

Although it’s still unclear exactly how European lawmakers will regulate NFT and DeFi or whether there will be new requirements regarding smart contracts, the success of the first step toward regulation — MiCA — could provide a significant boost to both EU crypto businesses and the EU economy as a whole. However, whether this success is realized will depend on the practical implementation standards developed in the future.

Ripple, Montenegro sign deal on project for unspecified national digital currency

The deal, teased in January, could create a national digital currency for a country that now uses the euro.

The Central Bank of Montenegro announced on April 11 that it had signed an agreement with Ripple for the development of a strategy and pilot program for a Montenegrin digital currency in the form of a central bank digital currency, or a stablecoin. The country has used the euro as its currency since its introduction in 2002, despite not being part of the Eurozone.

“More details will be revealed later in the year,” RippleX’s vice president for central bank engagements and CBDCs, James Wallis, told Cointelegraph in a written interview. “The project will go through several stages, including identifying the practical application of a digital currency or national stablecoin.”

Wallis indicated that a sandbox stage is planned to put the future digital currency “Into circulation under controlled conditions. […] We’ll work closely with the Central Bank to determine use cases, key success factors, and timelines.” The project will begin this month, he added.

Related: Montenegro makes Vitalik a citizen, part of plans to promote it as a blockchain hub

Central Bank of Montenegro Governor Radoje Žugić said in a statement that the central bank would work with the government and the academic community to “analyse the advantages and risks that CBDCs or national stablecoins could pose with respect to the availability of electronic means of payment, security, efficiency, compliance with regulations, and most importantly the protection of end users’ rights and privacy.” He added:

“As a central bank committed to following modern national banking trends, the Central Bank of Montenegro is actively ensuring it maintains an efficient financial system.”

Montenegrin Prime Minister Dritan Abazovic first disclosed the upcoming deal between Ripple and the Montenegrin Central Bank in a tweet from the World Economic Forum Davos in January.

Ripple has been touting its expansion in the CBDC space for months. Wallis said the company “has multiple CBDC projects ongoing around the world and is in dialogue with dozens of central banks globally.”

Magazine: China’s 180M digital yuan airdrop, Devastation in Turkey, Laos’ CBDC: Asia Express

European Banking Federation shares its vision of digital euro, wCBDC, bank tokens

The EBF calls itself the voice of the European banking sector; it expressed its support for European digital money, with suggestions of its own.

The European Banking Federation (EBF) has released a paper detailing its vision for the digital money ecosystem of the future, and the retail digital euro in particular. The carefully worded paper expressed values and concerns about the digital euro from the perspective of commercial banks. 

The paper, released on March 28, emphasized the bank’s values, such as stability and privacy. It called for closer public-private partnership in the introduction of the digital euro. “There is currently no dialogue in place to address the fundamental changes and risks to the monetary and financial system,” the paper said. At the same time, it stated that there needs to be a framework for permanent high-level engagement.

The EBF ecosystem vision emphasized the role of the private sector in all aspects, beginning with infrastructure, where Europe needs to lessen dependence on outside “actors.” That ecosystem would contain three elements: the digital euro, a wholesale central bank digital currency (CBDC) and bank-issued money tokens.

Related: ECB executive board member outlines plans for digital euro to European Parliament

In the EBF vision, the digital euro should have three levels, with a European Central Bank role and two industry levels — the first to interact with the Single Euro Payments Area and an “Industry Level B” that “would be subsequently developed and operated by the private sector, in compliance with the principles set out in the previous layers.” Those principles have yet to be developed fully. The paper continued:

“The European market needs the authorities to clarify the interaction of different and converging policy objectives, especially when it comes to the development of pan-European payment solutions at the Point of Sale / Point of Interaction.”

The paper was careful to refer to blockchain technology only in reference to certain parts of its envisioned ecosystem. A wholesale CBDC, where interoperability is key to enabling cross-border transactions with central bank money, was assumed to operate on distributed ledger technology (DLT).

In addition, bank-issued money tokens had a crucial role in the EBF vision for “business needs such as automated industrial processes that run on DLT and use smart contracts.” These tokens apparently correspond to Industry Level B of the digital euro scheme. More standardization would be needed for these solutions as well, the paper noted.

The EBF represents 33 national banking associations and 3,500 individual banks.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Stablecoins have plentiful machine-payment use cases in absence of euro CBDC: Report

The Digital Euro Association sees automated micropayments as a way for Europe to maintain its digital competitiveness, once regulations are in place.

Europe could lead the world in developing the Internet of Things (IoT) by harnessing the potential of stablecoins, the Digital Euro Association argues in a new report. Machine-to-machine (M2M) payment is a field poised for growth, and stablecoins, in particular, offer advantages for it, the report says.

There are growing use cases for M2M micropayments in industrial and home or office settings, such as handling charges for shipping containers and other fees along a logistics chain and pay-per-use fees for 3D printing, cloud storage and many other services. Currently, these uses are hindered by their potentially overwhelming volume and structural weaknesses, such as the need to layer application programming interfaces (APIs).

Stablecoins could increase scalability and reduce or eliminate intermediaries, thereby alleviating the usability and security challenges that APIs present, according to the report. The use of stablecoins would also eliminate human error.

Related: $100M fund aims to support the growth of decentralized machine economy

M2M payments also offer Europe a chance to take greater advantage of stablecoin technology, as many of its features are more applicable elsewhere:

“Outside of providing access to DeFi markets, typical stablecoin use cases have focused on improving financial inclusion or reducing the costs of cross-border remittances, which may not be so compelling in a European context.”

The European Central Bank has given M2M payments low priority for a digital euro design, even though “leveraging DLT technology in this context is being heavily explored.” Thus, stablecoin integration may be relevant in the long term:

“It is important that regulators foster growth in IoT and M2M payments, as it is key to maintaining the global competitiveness of the European digital economy.”

Regulators need to address a machine identity framework, stablecoin interoperability standards, guidance for unhosted wallets and other issues before the potential of stablecoins can be realized, the report says.


ECB executive board member outlines plans for digital euro to European Parliament

ECB board member Fabio Panetta affirms the ECB’s digital euro privacy policy and says the digital currency will never be programmable, but it may have an app.

The digital euro, should it come into existence, will preserve the role of the central bank by extending payment options beyond those offered by cash, European Central Bank (ECB) executive board member Fabio Panetta told a European Parliament committee Jan. 23.

Panetta expressed satisfaction with the progress of research on a potential digital euro. He told the European Parliament Economic and Monetary Affairs Committee:

“The ECB is at the global forefront of the efforts by central banks to design state-of-the-art digital payment solutions for both retail and wholesale transactions.”

Access to the digital euro would initially be open to consumers, businesses and governments within the euro zone, then be extended to individuals and businesses in the European Economic Area and finally to “selected third-party countries,” on the basis of agreements, Panetta said.

Related: Digital euro settlement, distribution options detailed in latest progress report

Accessibility and usability would best be delivered through a scheme that provided uniform rules, standards and procedures to allow the development of additional products and services based on it, Panetta said. Transactions with the digital euro should be free, with extra services from intermediaries available for voluntary use.

“The digital euro would never be programmable money,” Panetta said. “The ECB would not set any limitations on where, when or to whom people can pay with a digital euro.” The ECB will not seek access to personal data either, he told the committee:

“When it comes to the central bank, we propose that we do not have access to personal data. And it will be for you, as co-legislators, to decide on the balance between privacy and other important public policy objectives like anti-money laundering, countering terrorism financing, preventing tax evasion or guaranteeing sanctions compliance.”

The ECB is considering creating a Eurosystem app to assure that users can access services throughput the euro zone. Panetta added:

“When it comes to the hardware, people could pay either with mobile phones, physical cards or possibly other devices like smartwatches.”

Research will transition from the investigative to the realization stage in the third quarter of this year, Panetta affirmed. He concluded by reminding the legislators of their role in the digital euro project. “It has a clear political dimension in view of its broad societal implications,” echoing sentiments recently voiced by the Eurogroup of financial ministers.

Spain’s central bank approves euro-linked token pilot as part of sandbox initiative: Report

To use the tokens, users will need to verify their identity through phone and video identification, and load their wallet with real euros.

The financial sandbox initiative of the Bank of Spain, or Banco de España, has reportedly approved a project from fintech firm Monei testing a token linked to the euro.

According to a Jan. 18 report from Spain-based news outlet Cinco Días, the Bank of Spain gave the green light to Monei to issue its EURM token as part of a testing phase expected to last between six to 12 months. The sandbox was aimed at establishing a controlled testing environment for financial innovation projects in Spain under the supervision of central bank authorities.

As part of EURM’s testing phase, eligible Spanish residents with a phone number will reportedly be able to send the equivalent of 10 euro using the digital asset. The digital tokens will reportedly be backed 1:1 with physical euros held at Banco Bilbao Vizcaya Argentaria and Caixabank.

“The future of payments is digital,” said Monei CEO and founder Álex Saiz Verdaguer. “This is our opportunity to show the rest of Europe and the world that we are at the forefront.”

The Bank of Spain announced the launch of its own “exclusive” wholesale central bank digital currency, or CBDC, program in December. Though Monei’s project is not a CBDC issued by the European Central Bank, or ECB, Verdaguer said testing it through Spain’s central bank could lay the groundwork for such a token:

“[The Bank of Spain] may sit down with the ECB and say that we have the product, that it is regulated and supervised and that it is shaped from there.”

Related: Cosmos EUR stablecoin project to unwind after 2 years

The ECB announced in July 2021 that it had launched a two-year investigation phase for a digital euro, suggesting at the time a potential release in 2026. The central bank has since issued statements and working papers focused on the design and features of a CBDC, with the ECB Governing Council expected to review the results of the investigative phase in the third quarter of 2023.

EU finance ministers’ group releases statement on political aspects of digital euro

The Eurogroup confirmed its support for digital euro research and noted that some of the design and use elements under consideration would require political decision making.

The finance ministers from the eurozone countries have released a statement on the introduction of the digital euro after a meeting in Brussels. The Eurogroup meets regularly to discuss political dimensions of the potential digital currency, it said. The Jan. 16 statement coincides with the release of a European Central Bank (ECB) “stock taking” document detailing the progress of digital euro design.

The Eurogroup statement addressed the need for the European Central Bank and European Commission to inform the Eurogroup and EU member states of developments in the creation of the digital euro, which is in its investigative phase. The statement said:

“The Eurogroup considers that the introduction of a digital euro as well as its main features and design choices requires political decisions that should be discussed and taken at the political level.”

The group listed the issues it was watching, which included the environmental impacts of a digital currency, privacy, financial stability and related issues. It also expressed interest in the plans of non-eurozone European Union member states with regard to central bank digital currencies.

The members of the group “stand ready to contribute to these discussions,” they assured, adding:

“We also welcome the [European] Commission’s intention to table in the first half of 2023 a legislative proposal that would establish the digital euro and regulate its main features, subject to the decision of the co-legislators.”

That proposal is intended to come before the ECB Governing Council reviews the results of the digital currency investigative phase in the third quarter of the year.

Related: Queen Máxima of the Netherlands comes out in support of digital euro

The Eurogroup statement comes a day after a former Bank of England adviser published an editorial in the Financial Times saying that creating CBDCs is not worth the cost and risk.

Cross-border crypto scammers on the hit list for EU agencies

Europol and Eurojust, two EU agencies for law enforcement cooperation, joined authorities from Bulgaria, Cyprus, Germany and Serbia to investigate online investment fraud since June 2022.

By the end of 2022, scammers shifted their focus to duping crypto investors who desperately tried to recoup their year-long losses. An international law enforcement operation led by European government agencies joined crypto entrepreneurs and businesses to curb cross-border crypto scams since July 2022, uncovering a criminal network operating through call centers.

Europol and Eurojust, two EU agencies for law enforcement cooperation, joined authorities from Bulgaria, Cyprus, Germany and Serbia to investigate online investment fraud since June 2022. The investigation identified a criminal network that incurred over $2.1 million in losses — primarily for German investors.

According to Europol, the scammers lured victims — from Germany, Switzerland, Australia and Canada, among others — to invest in bogus crypto investment schemes and websites. This finding eventually led to the creation of an operational task force aimed toward cross-border investigation.

Operating across four call centers in eastern Europe, scammers lured potential victims by offering lucrative profits on small investments, which motivated them to make larger investments. Considering the number of unreported cases, Europol suspects total losses could be hundreds of millions of euros.

In the investigation, 261 individuals — two in Bulgaria, two in Cyprus, three in Germany and 214 in Serbia — were questioned, 22 locations in the EU were searched and 30 individuals were arrested. Hardware wallets, cash, vehicles, electronic equipment and documents were also seized.

While scammers continue to impersonate government authorities and businesses, the crypto community maintains a proactive approach to weaken scammers through proactive warning announcements, hack preventive fixes and educating the general public.

Related: $3.9 billion lost in the cryptocurrency market in 2022: Report

A report from bug bounty and security services platform Immunefi revealed that the crypto industry lost a total of 3.9 billion dollars in 2022.

Out of the lot, 95.6% of the total loss was attributed to hacks, while fraud, scams, and rug pulls comprised the remaining 4.4%. BNB Chain and Ethereum were the most targeted blockchains.

Mitchell Amador, CEO of Immunefi, suggested “proactively identifying and addressing vulnerabilities” to protect the community and rebuild trust among investors.