According to Bloomberg, DWS Group, a subsidiary of Deutsche Bank, Dutch market maker Flow Traders, and cryptocurrency fund manager Galaxy Digital are planning to establish a new company to issue a Euro-denominated stablecoin, aiming to promote the mainstream adoption of tokenized assets.
In a statement released on Wednesday the 13th, the company, named “AllUnity,” will be based in Frankfurt and led by former CEO of BitMex exchange, Alexander Höptner. AllUnity plans to apply for an e-money license from the German Federal Financial Supervisory Authority (BaFin) and launch a fully collateralized stablecoin within the next 18 months.
These companies are seeking to leverage their advantages and experience in both traditional and cryptocurrency markets to create regulated Euro stablecoins for institutional, corporate, and individual users. Höptner stated in an interview that while the total value of the stablecoin market has grown to around $130 billion, it is mainly dominated by USD stablecoins, with the largest being USDT issued by Tether. Data from provider Kaiko shows that the demand for Euro stablecoins in the past two years has been relatively low, with a monthly average trading volume of $90 million, compared to $600 billion for USD stablecoins.
Höptner mentioned that the regulatory framework for crypto assets in the EU, including stablecoin regulations, provides a clearer path for financial providers seeking to enter this market, and may lead to a wider adoption of Euro-denominated tokens. The increase in tokenization of traditional assets led by large corporations recently may also benefit the use of these tokens.
To maintain the value of stablecoins, issuers typically hold a certain amount of cash or liquid assets, such as holding US Treasury bonds in reserves. In an environment of rising interest rates, this model has become profitable for stablecoin issuers. Höptner noted that AllUnity plans to manage the proposed stablecoin reserves by DWS.