NEW YORK — Cryptocurrency company Circle said today that it will start issuing its first euro-denominated cryptocurrency, a stablecoin known as Euro Coin, later this month.
It would be the first stablecoin in euros — the world’s second-most-important reserve currency after the U.S. dollar — backed by a large player in the industry and could potentially become a major conduit for moving cryptocurrencies throughout Europe.
The stablecoin, meaning it’s backed by hard assets, is launching at a time of major declines in the value of cryptocurrencies like bitcoin, which has led crypto firms to fail and erase billions of dollars of digital wealth.
Circle owns and operates USD Coin, the second-most-popular stablecoin in the industry, with more than $54 billion sitting in that coin. The most popular is Tether, which has a market capitalization more than $70 billion.
Stablecoins have become an increasingly important part of the cryptocurrency market, acting as a bridge between traditional financial services like banks and those who want to invest or lend in bitcoin or ethereum. They are typically backed by hard assets, like cash, gold or safe government bonds and are typically priced as one coin for one unit of a particular type of currency.
USDC is backed 1-for-1 by cash and short-term Treasurys. The new Euro Coin will be backed entirely by euros held in euro-denominated bank accounts, Circle said.
The company is launching Euro Coin amid turmoil for cryptocurrencies. The third-largest stablecoin, Terra, collapsed in May in a matter of days. Terra was not backed by hard assets, like Tether or USDC are, and instead relied on an algorithm to keep its $1 value in check.
The firm Celsius, with more than $10 billion in deposits, effectively failed this week, and customer deposits have been locked up in the company’s accounts with no timetable on when, or if, customers will get their funds back.
Circle’s USDC has been a popular place for cryptocurrency investors to move their investments during the turmoil. The total number of USDC in circulation has increased from $49 billion at the beginning of May to more than $54 billion as of this week, according to Coinmarketcap.com. In the same time, Tether’s circulation has declined from $83 billion to roughly $71.5 billion.
“This is actually, in some ways, it’s a great time to be launching products,” Jeremy Allaire, the CEO and co-founder of Circle, said in an interview. “The market turmoil has been a really positive catalyst for USDC. It has been the flight to safety for crypto.”
Circle’s Euro Coin will be tradeable on some of major crypto exchanges, including Binance, starting on June 30.