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Société Générale’s euro-backed stablecoin, EUR CoinVertible (EURCV), has been listed on the Bitstamp exchange in Luxembourg!
This is the first stablecoin issued by a bank! If you stretch the word “first” and the word “stablecoin.”
EURCV is as useful as every other enterprise blockchain scheme — it doesn’t do anything, but you can market it with ancient bitcoin slogans with a different buzzword in them.
EUR CoinVertible: what it is
Société Générale (SocGen) is France’s third largest bank. SocGen Forge is their experimental blockchain unit, founded in 2018.
Jean-Marc Stenger, chief executive of SocGen Forge, promoted EUR CoinVertible to the Financial Times by talking about the huge US dollar domination of the stablecoin market — meaning Tether and USDC. [FT, archive]
Here’s the EUR CoinVertible white paper. [SocGen Forge, PDF]
SocGen has big ambitions for EURCV:
… we want our solution to be widely available through major Digital Asset exchanges to offer market participants a robust alternative for their needs. We also hope to see our solution used as a quality asset for various on-chain transactions (collateral, margining, wrapping to another blockchain etc.).
The trouble is that SocGen can do hardly any of these fancy DeFi tricks — because they can’t get away with setting up a money-laundering coin.
How EUR CoinVertible works, or not
EUR CoinVertible is “open to anyone who wants to use it, either operations on our own platform or other platforms,” Stenger told FT. This is only true in the sense of “anyone” who’s signed up with SocGen as an authorized user of the token.
EURCV will be issued on the public Ethereum blockchain as an ordinary ERC20 token. But you will only be able to move tokens if you’re whitelisted with SocGen as an authorized customer. Only “qualified investors” under French law — analogous to “sophisticated investors” in the UK or “accredited investors” in the US — can become EURCV customers.
So you can trade EURCV on Bitstamp against EUR and USDT — but you can’t move it off again unless you’re a fully qualified and KYCed customer of SocGen. [Bitstamp, archive]
Functionally, EURCV is a zero-interest bank account with SocGen — but less flexible.
EURCV is so locked down that we can’t even think of a way to use it for scamming.
Why would you even do this?
SocGen Forge has produced multiple blockchain products. Very few of these have more than pilot usage. That doesn’t matter, because the project existing at all matters much more than whether it’s of the slightest use. [Forge]
Banks want to chase the crypto buck — they think it’s cheap, free money from morons. This is true, but only if you break as many laws as crypto does.
Banks can’t really do that — so they end up creating things that don’t work for the crypto guys and also don’t work for conventional finance.
The potential is incredible, of course. Just imagine the hypothetical wins!
Banks were worried that a new wave of fintech startups — online banking, mobile lending, etcetera — were going to steal business from them. So in the mid-2010s, they formed fintech innovation teams.
Those bank innovation teams have to justify their existence. Sometimes they come up with something useful! But usually they just go with blockchain. We hear it’s the future of money.
Bank blockchain teams tend to coalesce around a few hardcore coiners who see it as their sacred mission to evangelize the good news about crypto. Anyone who isn’t a hardcore coiner moves elsewhere, to spend their life on something less futile.
The only reason to put EURCV on the public Ethereum chain is so that SocGen can say they’re doing a public stablecoin.
For similar reasons, SocGen Forge did an 11 million EUR “green bond” on Ethereum in November. It’s got all the finely permissioned and documented legal requirements of any other bond — but it’s also on Ethereum, for no functional reason. [Press release]
The attraction for SocGen is to claim it’s bringing “tech” to France, and it doesn’t matter if the tech is incoherent trash.
The Byzantine Manager Problem
Bank culture is about minimizing risk. So banks are terrible at innovation. Issuing a “stablecoin” is easier than being in any way actually innovative.
There are also many in the financial sector who want things to stay just as they are: lack of transparency, bad systems, no competition.
And there’s no better way to keep things the same than to invest in “innovation” that can’t work.
Blockchain is the perfect solution to this Byzantine Manager Problem:
- Imagine a group of senior Byzantine managers who need to implement a new system.
- If managers do not support any ideas, they will be fired for failing to show leadership.
- Anyone supporting a strategy for implementing the new system knows that if it fails, the other managers who did not support the idea will unite to blame them and crush them.
- All the managers know that none of them are capable of predicting what will work.
- If managers do not support an idea that subsequently succeeds, the supporters of the successful idea will drive them out of the organization for failing to support them.
- The solution is to find an idea that is guaranteed not to work, i.e., blockchain. Every manager can support the strategy because guaranteed failure means everyone can show leadership with no chance of another faction blaming them for failure or lack of support.
Images: Teodor Kreczmar-Schuldorff
Other bank stablecoin tokens
The current favored euphemism for bank stablecoins is “tokenized deposits.”
Tokenized deposits represent traditional bank deposits — e.g., J.P. Morgan’s JPMCoin is a token traded on a private Ethereum instance they run in-house, and only JPMCoin customers can access it. This sounds pointless because it is.
Citibank has Citi Token Services. This doesn’t do anything. But it could and it has potential! Citi did a test transaction with Maersk. [Bankingdive; Citigroup; Bloomberg, archive]
ANZ Bank in Australia issued a tokenized deposit in 2022. It did two test transactions!
The crypto world has TassatPay, the successor to Silvergate Exchange Network and SIGnet, for internal settlement between US crypto companies. Somehow the banks involved don’t talk this one up so much.
When you read a puff piece that talks about companies doing a real, genuine single blockchain transaction, it means the two companies’ blockchain innovation units are both trying to justify their existence.
SocGen’s innovation is to put their useless private altcoin on a public blockchain — but they have to maintain the same level of absolute control as with anything else that touches real money to keep the crooks out, or the regulators will be deeply unhappy with them.
You might think that all of this sounds completely pointless, and you must just be missing the subtle reasons why it’s actually very clever and useful. We would just tap the sign again:
Amy Castor 