Societe Generale Becomes The First Large Bank To Launch Dollar-Based Stablecoins

French bank Societe Generale launched a US dollar-based stablecoin (photo: x @TheCrypt01NTERNter)

JAKARTA The French bank, Societe Generale, announced on Tuesday 10 June that it will launch a publicly tradable US dollar-based stablecoin through its digital asset subsidiary, SG-FORGE. This makes Societe Generale the first major bank to enter the growing dollar stablecoin market.

The new stablecoin, dubbed USD CoinVertible, will be published on two main blockchain networks: Ethereum and Solana. Public trade is scheduled to begin in July, according to a statement from SG-FORGE.

Stablecoins are a type of cryptocurrency commonly pegged in traditional currencies such as US dollars. This technology allows large amounts of remittances through blockchain networks without using traditional banking payment systems.

The stablecoin market is experiencing rapid growth, mainly driven by crypto company Tether (USDT), which currently has issued a stablecoin worth 155 billion US dollars (Rp 3,408 trillion).

Previously, SG-FORGE also launched a euro-based stablecoin in 2023. However, its use is still limited with a total circulation of only 41.8 million euros (Rp774.7 billion), according to its official website.

Societe Generale insists that the stablecoins they publish are classified as e-money tokens' and will be arranged according to MiCA (Markets in Crypto-Assets), EU crypto regulation that goes into effect in 2023. For the record, Tether does not yet have an operating license in the European Union under MiCA.

SG-FORGE CEO Jean-Marc Stenger stated that currently there is a high demand from the market for dollar stablecoins that have clear regulations.

"Currently, no players from the banking sector have entered this realm ... that's the feedback we receive from the market from corporations, financial institutions, or crypto exchanges," said Stenger, quoted by VOI from Reuters. There is a huge need for stablecoins to be regulated and have a strong structure in the crypto world.

Like a stablecoin issuer in general, SG-FORGE will receive dollar funds from customers and exchange them for digital tokens. They will benefit from investing the funds into assets that generate returns, such as government bonds.

Bank BNY Mellon will act as a custodian for SG-FORGE dollar reserves, which will initially be kept in cash before being invested in other assets, said Stenger.

SG-FORGE stated that their stablecoins can be used for various purposes, including crypto trading, cross-border payments, foreign exchange transactions, as well as guarantee and cash management. These tokens will be listed on various crypto exchanges, although specific details have not been disclosed.

Currently, more than 15 crypto exchanges and brokers are in the process of joining as SG-FORGE clients, added Stenger.

Meanwhile in the US, Congress is considering legislation to create a regulatory framework for stablecoins. The CEO of Bank of America previously stated that its banks could launch stablecoins, and several other major banks were also considering the issuance of joint stablecoins.

Tether, as the world's largest stablecoin publisher, revealed that by 2024 they will become the seventh largest buyers of US government bonds as their dollar reserves are invested in the US Treasury.

Meanwhile, Circle's second-largest stablecoin publisher, officially listed on the US stock exchange on June 5 and recorded a 48% increase in shares on Friday.

Regulators have long warned that stablecoins could affect financial stability if they are too connected to traditional financial markets and volatile crypto markets.