France has come under fire for releasing a new euro-pegged stablecoin due to its decision to restrict peer-to-peer transactions.
Societe Generale (SGF) released an ethereum-based stablecoin called EUR CoinVertible (EURCV) on April 20 for qualified institutional clients only. According to observers who have reviewed its smart contract code, its ERC-20 transfers need to be by first approved Registrar presumably one controlled by a bank before transactions can be processed.
In a tweet on April 20, anonymous smart contract engineer “alephv.eth” explained: “They coded it so they have to whitelist all users, handle all user transfers, even process your ERC20 approval before they process your 'transferFrom' lmao.”
She further mocked the code in a separate post, calling it an "aggressive commitment to inefficiency in the name of regulation." Nonfungible token project founder “foobar” tweeted to his more than 127,000 followers on April 20 that it was “the worst code I 've ever seen” and described the stablecoin as a “laughing stock.” Crypto researcher Mason Versluis tweeted that the code was “absolutely horrible” and advised the French bank to “stop trying to be sneaky” into the crypto space.
Many others participated in the criticism, but Ether. Investor Ryan Berckman offered a more neutral analysis. He explained that many traditional financial firms like SGF will be taking “small steps” when entering the blockchain and digital asset space: “Obviously, non-compliant , non-combinable, allowlist style stables will not be competitive in the market. Small steps, they come from tradfi, they will see and switch to USDC style denylist soon.”
SGF's claim to be the first bank to launch an institutional stablecoin on a public blockchain may also be incorrect, Berckman explained. He pointed to the AUDN stablecoin minted on ethereum by the National Australia Bank (NAB) in March, which the bank claims are the second to launch a stablecoin. Regardless, Berckman expects more banks to follow suit in the coming months, saying he is “sure” that SGF won't be the last bank to launch a stablecoin on a public network.
SGF's stablecoin is not intended for public use at least not at first. According to the bank's April 20 announcement, EURCV is only available to institutional clients who are onboarded by the bank through its know-your-customer (KYC) and anti-money laundering (AML) procedures.
Stablecoins aim to bridge the gap between traditional capital market assets and the digital asset ecosystem. A total of 10 million EURCV tokens were minted on Ethereum in April, according to data from ethereum explorer Etherscan. All 10 million tokens are held by one wallet address. The stablecoin is launched against a backdrop of growing demand for new settlement assets to process on-chain transactions.
