The EURB is fully regulated and backed 100% by Euros, allowing banks and institutional investors to use the cryptocurrency without exposure to counterparty risk.
Germany’s Bankhaus von der Heydt, or BVDH, has launched a Euro stablecoin on the Stellar network.
The bank claims the token is the first of its kind to be issued by a banking institute.The EURB stablecoin, which went live today, was developed on the Stellar blockchain in partnership with tokenization and digital asset custody technology provider Bitbond.
The asset, which is fully regulated and backed one for one with Euros, will not be openly traded on exchanges due to tight regulatory and know-your-customer requirements.
If a customer wants to acquire the stablecoin, a fiat currency transfer is held in an escrow account at the BVDH, which triggers the issuance of the EURB. The announcement states that developers of financial applications can immediately utilize the token to settle asset transfers on-chain. The underlying platform, built by Bitbond, gives full control of the stablecoin’s security to the bank, including mechanisms for burning and minting the token.
BVDH, which was established in 1754, has traditionally focused on institutional clients in securitization-related transactions. The choice to use Stellar and Bitbond (who have been working together since 2019) was made after almost a year of exploring distributed ledger technology, BVDH managing director Philipp Doppelhammer explained:
“We were drawn to Bitbond and Stellar due to the ease in which assets are issued and managed on the network.”
Doppelhammer stated that the EURB’s first use case will be for “cross-border money transfers” for blockchain payments company SatoshiPay’s business customers.
The lack of a fully licensed bank backing today’s stablecoins is their main shortfall, BVDH business development manager Lukas Weniger stated. Bitbond founder and CEO Radoslav Albrecht noted:
“Banks normally wouldn’t feel comfortable using [stablecoins] like Tether or USDC, due to the potential counterparty risk that is behind them […] They prefer to work with stablecoins issued by banks, and the same is true for institutional investors.”
The German regulator Federal Financial Supervisory Authority has already provided their approval for Bitbond to issue tokenized bonds on Stellar.
Earlier this week, German private bank Hauck & Aufhäuser announced its first crypto fund, the HAIC Digital Asset Fund I, launching Jan. 1, 2021, which will include BTC, Ether, and Stellar’s XLM.
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