SocGen is set to launch the first global banking group-backed dollar-denominated stablecoin on Ethereum, as banks explore stablecoins to stay competitive with cryptocurrency-native firms.
Société Générale’s crypto arm, SG Forge, is reportedly set to launch a dollar-backed stablecoin on Ethereum, making it the first global banking group to issue a public stablecoin tied to the U.S. dollar.
The launch comes amidst growing stablecoin adoption, with banks exploring stablecoins to stay competitive with cryptocurrency-native firms. The shift is driven by the need for financial institutions to unlock the full potential of these tokens, according to PayPal‘s crypto head Jose Fernandez da Ponte. Banks are looking into stablecoins as a means to avoid being outpaced by their competitors in the digital asset space.
Stablecoins have gained significant traction in recent years, with many financial institutions and companies adopting them for various purposes.
According to a report by Deloitte, stablecoins are expected to reach $1 trillion in value by 2028.
Their adoption is driven by their ability to provide price stability, reduce volatility, and increase efficiency in cross-border transactions.
Major players like Facebook's Libra and JPMorgan's JPM Coin have also entered the market, further fueling growth.
The dollar-backed stablecoin will initially target institutional investors and leverage SG Forge’s e-money license to operate legally across the European Union. The token would be publicly accessible on Ethereum, with additional support for Solana to follow. The launch is expected in the coming weeks, according to a report by French publication The Big Whale.
SG Forge’s dollar stablecoin would expand the bank’s footprint in the digital asset space following the 2023 debut of its euro stablecoin, EURCV. However, it faces stiff competition from existing stablecoins like Circle‘s USDC and Tether‘s USDT, which dominate the ecosystem with market caps exceeding $60 billion and $151 billion respectively.
Euro-denominated tokens represent a fraction of the $243 billion stablecoin market. In contrast, U.S. dollar stablecoins dominate the ecosystem. The launch of SG Forge’s dollar stablecoin would further increase competition in the market, with implications for existing players like World Liberty Financial and MGX.
The stablecoin market has experienced significant growth in recent years, with a total market capitalization of over $100 billion.
Stablecoins are digital assets pegged to the value of a fiat currency, providing a stable store of value and medium of exchange.
The top three stablecoins by market capitalization are USDT (Tether), USDC (USD Coin), and DAI (MakerDAO).
These coins have gained popularity among institutional investors and traders due to their low volatility and high liquidity.
The launch of SocGen‘s crypto arm on a dollar-denominated stablecoin on Ethereum is a significant development in the growing stablecoin adoption space. As banks explore stablecoins to stay competitive, this move marks an important milestone for SG Forge and the wider financial sector.
Societe Generale, a French multinational banking and financial services company, has established a dedicated crypto-asset division.
The move aims to provide institutional clients with access to digital assets, including Bitcoin, Ethereum, and other cryptocurrencies.
The bank's crypto arm will offer trading, custody, and advisory services.
This strategic initiative reflects the growing recognition of cryptocurrency's potential in mainstream finance.
