Société Générale Forge (SG Forge), the digital asset subsidiary of the prominent French banking firm Société Générale, has unveiled a new stablecoin, CoinVertible ($EURCV), pegged on the Euro. The stablecoin was launched on the Ethereum blockchain, and will be exclusively available for qualified institutional clients.
Société Générale has not disclosed the requirements for qualifying to access the $EURCV stablecoin, only stating that it has pre-qualified institutional clients who have passed for its KYC verification process. The launch can be seen as a response to the growing demand for an on-chain asset that can be used for cross-border settlements. In effect, this bridges a gap between traditional capital markets and the digital asset management, particularly those linked in decentralized finance and the Ethereum ecosystem.
The stablecoin also aims to offer new solutions for corporate treasury management, cash flow and on-chain liquidity management, as well as cash pookling initiatives for funding and refinancing. However, the new stablecoin was met with a certain degree of criticism from blockchain developers, highlighting some concerning traits inside the contract code.
A software engineer known as Cygaar has recently discovered that the stablecoin could potentially allow the bank to seize and burn all its users' funds through certain functions in its smart contract. Cygaar criticized the bank's choice of system, stating that Société Générale would have been better off using JPMorgan's Onyx or an internal database for a centralized settlement layer.
Origin Protocol developer Scott Mitchell expressed skepticism about the stablecoin's feasibility on Ethereum from an economic perspective. He argued that even with batch validation and low gas costs, the system would still be too expensive at scale.
Another developer, 0xfoobar, pointed out that the code requires every ERC20 transfer to be approved by the centralized registrar in a separate Ethereum transaction before it can be processed.
Pseudonymous smart contract engineer alephv.eth also drew attention to this issue, noting that the bank coded the system in such a way that it necessitates the whitelisting of all users and the processing of all user transfers and ERC20 approvals before executing the "transferFrom" function. This could significantly slow down the transaction speed for the stablecoin and complicate the process.
As concerns mount over the EUR CoinVertible smart contract's design and functionality, it remains to be seen how Société Générale-Forge will address these issues and whether the stablecoin will gain traction among institutional clients given the issues highlighted by blockchain developers.
The EURCV stablecoin will be traded under the ticker symbol EURCV, accessible only to investors who have been onboarded by Société Générale through its Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures. In the coming weeks, SG-Forge CEO Jean-Marc Stenger will assess the interest of prospective clients and address their questiopns as part of the gradual adoption process.
The newly introduced stablecoin is designed to adhere to major market standards, including the open-source interoperability and securitization framework known as Compliant Architecture for Security Token (CAST). SG-Forge emphasizes that it will guarantee the "complete segregation" of the collateral assets backing the value of the stablecoins from the issuer. According to the bank, this will be coupled with daily transparency reports and collateral positions to ensure the utmost integrity.
The EUR CoinVertible smart contract has undergone auditing by professional services network PwC. Law firm White & Case has advised SG-Forge on the issuance of the stablecoin, while the role of the fiduciary is entrusted to Equitis Gestion, a private equity firm regulated by the French financial regulator, the Autorité des Marchés Financiers (AMF).
Jean-Marc Stenger, SG-Forge's CEO, is optimistic about the potential of stablecoins built under a banking-grade structure in bolstering trust and confidence in the crypto ecosystem, sharing that:
“This issuance is a major step in SG-Forge’s roadmap to deliver innovative solutions to its clients, either real-money institutions and corporates or entities of the crypto industry, and to facilitate the emergence of new market infrastructures based on blockchain.”
Société Générale, which operates as one of France's largest banks by volume and assets held, has been increasingly involved in crypto and blockchain-related implementations over the past few years. In September 2022, the bank introduced custodial services for crypto fund managers through its Security Services subsidiary. The bank has also been experimenting with issuing security tokens on blockchains such as Tezos.
Disclaimer: 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.
