Societe Generale becomes first major bank to launch dollar-pegged stablecoin

France’s Societe Generale (SOGN.PA) announced on Tuesday its intention to introduce a publicly tradable, dollar-backed stablecoin via its digital asset subsidiary, marking it as the first significant bank to venture into the expanding market of dollar-pegged cryptocurrencies.

The new digital currency, titled “USD CoinVertible,” will be launched on both the Ethereum and Solana blockchains, with public trading anticipated to commence in July, as stated by SocGen’s crypto division SG-FORGE. Stablecoins represent a category of cryptocurrency that is generally pegged to a conventional currency, predominantly the dollar, enabling individuals to transfer substantial amounts of money utilizing blockchain networks rather than conventional banking payment systems.

This sector has experienced swift expansion, propelled by the crypto firm Tether, which has issued $155 billion worth of its dollar-pegged tokens.

In 2023, SG-FORGE introduced a euro-based stablecoin, although it has not gained widespread acceptance, with only 41.8 million euros ($47.62 million) currently in circulation, according to its website.

SocGen indicated that its stablecoins are categorized as e-money tokens and will be governed by MiCA, the European Union’s groundbreaking crypto regulation enacted in 2023. Tether lacks a license to operate within the European Union under MiCA.

Jean-Marc Stenger, CEO of SG-FORGE, remarked that there is a demand for a regulated dollar-based stablecoin. Typically, stablecoin issuers accept dollars from clients and provide them with the crypto token in exchange. The issuers generate profit by investing these dollar reserves into yield-generating assets such as bonds.

BNY will act as the custodian for SG-FORGE’s reserves, which will initially be maintained in a cash account before being allocated to other assets, as stated by Stenger. SG-FORGE mentioned that its token can be utilized for crypto trading, cross-border payments, foreign exchange transactions, and the management of collateral and cash, and will be available on various crypto exchanges, although further details were not disclosed.

The subsidiary has “more than 15” crypto exchanges and brokers currently being onboarded as clients, Stenger added.