FILE PHOTO: The logo of Societe Generale bank is pictured on an office building in Nantes, France, March 16, 2023. REUTERS/Stephane Mahe/File Photo
PARIS (Reuters) -France's Societe Generale said on Tuesday it plans to launch a publicly tradable, dollar-backed stablecoin through its digital asset subsidiary, making it the first major bank to enter the growing market of dollar-pegged cryptocurrencies.
The new digital currency, named "USD CoinVertible", will be issued on both the Ethereum and Solana blockchains, with public trading expected to start in July, SocGen's crypto arm SG-FORGE said in a statement.
Stablecoins are a type of cryptocurrency typically pegged to a traditional currency, usually the dollar, allowing people to move large sums of money using blockchain networks instead of traditional banking payment systems.
The sector has seen rapid growth, driven by crypto company Tether, which has issued $155 billion of its dollar-pegged tokens.
SG-FORGE launched a euro-based stablecoin in 2023, although it has not been widely adopted, with just 41.8 million euros ($47.62 million) in circulation, according to its website.
SocGen said its stablecoins are classed as e-money tokens and will be regulated under MiCA, the European Union's landmark crypto regulation adopted in 2023.
Tether does not have a licence to operate in the European Union under MiCA.
Jean-Marc Stenger, CEO of SG-FORGE, said that there was demand for a regulated dollar-based stablecoin.
"At the moment, there are no other banking-related players in that space ... that's definitely the feedback we have from the market, both corporates, financial institutions, but also crypto exchanges," he said. "There is a very, very strong need for well-regulated, robust offering in the crypto and stablecoin space".
Stablecoin issuers typically take in dollars from customers and give them the crypto token in return. The issuers profit by investing these dollar holdings into yield-bearing assets such as bonds.
BNY will serve as the custodian for SG-FORGE's reserves, which will initially be kept in a cash account, before later being invested into other assets, Stenger said.
SG-FORGE said that its token can be used for crypto trading, cross-border payments, foreign exchange transactions and management of collateral and cash, and will be listed on various crypto exchanges, without giving further details.
The subsidiary has "more than 15" crypto exchanges and brokers being onboarded as clients, Stenger added.
In the U.S., Congress is poised to pass legislation to create a regulatory framework for stablecoins. Bank of America could launch a stablecoin, its CEO said earlier this year, and some other large banks are considering issuing a joint stablecoin.
Tether is the world's largest stablecoin issuer. Its CEO said in a post on X that the company was the seventh biggest buyer of U.S. government debt in 2024, because it holds its dollar reserves in Treasuries.
The second-largest issuer, Circle, went public on the U.S. stock market on June 5 and saw its shares soar 48% on Friday.
Regulators have long warned that stablecoins could impact market stability by creating connections between mainstream finance and more volatile crypto markets.
($1 = 0.8778 euros)
(Reporting by Elizabeth Howcroft; Editing by Tommy Reggiori Wilkes, Louise Heavens and Susan Fenton)
