Blockchain

Why Euro-Stablecoins have a hard time

Krypto-Trader explains: Why Euro-Stablecoins have a hard time

There is no prominent Euro-Stablecoin yet, and this is unlikely to change any time soon.

On the crypto market there are several popular Stablecoins linked to the US dollar. Although there are also Stablecoins linked to the Euro, by Bitcoin Profit they are much less popular with crypto users, as Zahreddine Touag of the Parisian crypto company Woorton believes.

„There is not one euro-stablecoin that has high liquidity“, as Touag stated on Thursday in a discussion round of the Paris Blockchain Week. He gives several reasons for this, the main one being that it is simply „very expensive to run a Euro-stablecoin“. He explains this as follows:

„The primary source of income for operators of US dollar-based stablecoins is interest, with the US dollar showing a positive interest rate, whereas the interest rate in Europe is negative or has been negative for a long time“.

The thesis about the popularity of US dollar-based stablecoins can be confirmed by a look at the cryptomarket

For example, the market-leading Stablecoin Tether (USDT), about which controversy is always arising for other reasons, is tied to the US dollar. Tether is now even the fourth largest crypto currency with a market capitalisation of almost 20 billion US dollars. Other major stablecoins linked to the US dollar are the USD coin (USDC) and the TrueUSD (TUSD), which also have considerable market capitalisations.

The few euro-based stablecoins are much less prominent. Although the crypto ranking portal CoinMarketCap carries a Euro-based stablecoin called Stasis Euro (EURS), this only has a market value of just under USD 37 million.

„The second main reason is that Europe is still a very small player in the crypto market,“ as Touag further illustrates the difficult lot for European Stablecoins. „Most innovations in this field do not come from Europe, but the big players are based in the USA and Asia,“ the expert says.

In addition, the stablecoin market has a kind of „winner-take-all“ constellation, because the high liquidity also prompts Touag and his company to prefer tether over smaller dollar stablecoins such as the USDC: „That is why we at Woorton also use tether, even though we actually prefer the USDC, but cash flow, clients and counterparties are with tether“.