Home > NEWS > Regulation and risk: Factors driving demand for a euro-backed stablecoin

Regulation and risk: Factors driving demand for a euro-backed stablecoin

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Stable currency is a kind of data encryption currency that provides price stability for investors. The most popular stable currencies are those supported by the US dollar, the world's leading reserve currency. Others are not very popular and are not widely used, so many people should not have heard of alternatives if they have not been able to retrieve them.

According to the information of the international monetary and international financial organization, the euro is the second most widely held reserve currency in the world, second only to the US dollar, and the technology is ahead of rmb. The euro is the currency of the official network of the euro region. it is made up of 20 of the 27 member states of the European Union, and more than 300 million euros are used as the supporting currency.

In the data encrypted currency industry, the euro is widely used by data encrypted currency trading websites based on customers of EU member states. However, when it comes to stable currencies, stock index futures backed by euros are less popular, most notably through leading stable currency service providers.

The leading euro supports stable and outdated enterprises

Both Tether and Circle, the world's largest stable currency publishers, are stable currencies backed by euros in circulation. Euro Bridge (EURT) has more than 200 million OPCs in commodity circulation, but in contrast to US dollar-backed bridges (USDT), there are 70.9 billion OPCs in commodity circulation.

Similarly, Circle euro coins (Euroc) have nearly 32 million commodity tokens in circulation, and the US dollar supports stable dollar coins (USDC) with a supply of more than 42 billion commodities in circulation. Cointelegraph contacted Circle to post about these numbers. The company highlights the recent launch of Coinbase, a Nasdaq-listed data cryptocurrency trading centre, which highlights the increasing use of Euroc.

Euroc was founded less than a year ago and was released in June 2022. On the other hand, USDC was carried out by the core alliance in 2018, and Circle and Coinbase were both founding members of the alliance.

In an interview with Cointelegraph, Danny Tarva, tax director of Koinly, the data encryption tax calculation method, said that the widely adopted stable euro system would be "certainly" beneficial to the data encryption currency sales market because he could "allow more efficient access to the trading center and the Defi agreement."

But when science studies the circulation of stable currencies backed by dollars and euros, Tarwar shows that "there is still a worldwide need for stable currencies denominated in dollars, and the euro has undergone strong changes in the past 12 months."

The recent rise in interest rates has caused anxiety about the ability of some big euro-zone economies to bear its impact. The ECB has raised interest rates to 2.5 per cent, still well below the foreign reserve requirement ratio of 4.50 per cent to 4.75 per cent at this stage.

Will the popular stable euro currency be proactive in terms of data encryption?

While rising interest rates add big risks, they also open up entirely new opportunities, especially for those who have cash on hand. Stablecoin publishers, such as Tether and Circle Back, have circulation tokens with the same risk reserves, allowing them to benefit from higher annual interest rates. When we are interested in this matter, the relatively stable business process can be improved only when the customer needs exist.

In an interview with Cointelegraph, a spokesman for Tether stressed that the widely adopted stable euro system could be beneficial to the data cryptocurrency industry because it "provides a quick and low-cost property transfer option for anyone with a data cryptocurrency wallet." For Tether, this may represent another step forward in the journey to increase access to the financial sector. The spokesman added:

"stable currencies are increasingly showing their effectiveness as a store of use value because they provide more reliability, a way to remit money, a means of hedging transactions to find central bank policy makers who harm the country's currency, and a cheaper access to financial information services."

The spokesman said that this stable currency would strengthen the euro, just as the USDT raised the dollar as one of the world's major currencies. At the same time, it also creates opportunities for many sales markets, as well as access to the decentralized financial ecosystem.

They say Tether is more interested in introducing euro-backed stable currencies into emerging economies than in Europe and the United States. This is mainly because the company feels that people in emerging economies have a higher need for relatively stable laws to support stable currencies. This stable currency can help us "protect ourselves from a substantial devaluation of the country's currency".

The effectiveness of a stable currency as a store of use value, remittance and hedging currency devaluation can help it improve access to financial services and raise requirements for countries around the world.

The need for a stable euro

As customers buy more stable currencies, their reserves soar, and companies that manage stable currencies can bring new cash through government bonds and other quasi-currencies.

It is not unreasonable that there must be an euro-zone currency that supports a stable currency and represents a distributed book. Year AppCEO Johnson Keeley told Cointelegraph that most stable coins are now denominated in dollars. However, "for those who expect to own the euro without bearing the risk of the exchange rate of the euro against the dollar, a stable currency of the euro brings this ability."

Kiely sees no reason why stable currencies denominated in euros should not compete with stable money markets denominated in dollars because of the position of the euro as the world's reserve currency. He pointed out that the euro's support for a stable currency "must be chosen by more people before it becomes more widespread," he added.

"in the final analysis, it mainly depends on whether people want to own euros locally or the speculative price of euros against the dollar, and whether regulators are willing to accept the sale of euro coins by third parties."

He added that the policies and regulations on the market for the sale of encrypted assets (MICA), which will be voted by the European Parliament in April, will adversely affect the future development of stable property.

Policies and regulations are of vital importance

The public vote on MICA directly determines the regulatory policy and structure for stable currency issuers operating in the EU and could have a profound impact on the broader market for the sale of data encrypted currencies.

Kiely said regulators had already implemented "laughing at login password regulation" to allow independent innovation to develop rapidly, but strengthening regulation "does not have to represent bad luck and negativity".

A spokesman for Tether told Cointelegraph,Mica that it would "impose strict restrictions on the circulation of non-euro-denominated stable currencies in foreign countries in this way", adding that stable currency publishers were looking forward to "continuing to work with regulators to consolidate the emergence of digital currencies and to use stable currencies as an important means of economic independence and innovation."

Tether further said that it is looking forward to strengthening the strict supervision of the field of smooth login passwords, focusing on the full transparency of the demand control of login password consumers, especially for large enterprises, institutions and financial companies looking forward to entering this field.

They say that controlling picture quality will benefit relatively stable stock issuers, intelligentize payment platforms and improve access conditions for the financial system.

The law of the distributed account book stipulates that the currency version number has several advantages over the currency prescribed by law, which should benefit from their adoption of the distributed system ledger technology. When the financial regulator addresses the risks associated with stable investment, he should demonstrate a higher overall goal of promoting financial reform and promoting more financial diversity.

by Francisco Rodrigues
© 2023 WJB All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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