Deutsche Bank's DWS Group, Galaxy Digital Plan Euro-Backed Stablecoin Launch Pending Regulatory Approval

A fully collateralized euro-backed stablecoin is expected to be launched within 18 months, pending the approval of an e-money license by Germany's Federal Financial Supervisory Authority (BaFin).

What Happened: Deutsche Bank’s DB DWS Group, Dutch market maker Flow Traders Ltd., and crypto fund manager, Michael Novogratz’s Galaxy Digital Holdings BRPHF plan to form a company, AllUnity to issue a euro-denominated stablecoin. The company targeting the mainstream adoption of tokenized assets is based in Frankfurt and will be headed by former BitMex CEO, Alexander Höptner.

The new company will apply for an e-money license with Germany’s financial watchdog BaFin for launching the fully collaterized stablecoin within the next 12–18 months.

The company is slated to launch in Q1 2024 after the required initial regulatory approvals. The stablecoin will be launched only after the full e-money license is approved.

Also Read: SocGen Becomes First Major Bank To Back Euro Stablecoin On Crypto Exchange Bitstamp

Why It Matters: To maintain the token value, the issuers will typically hold an amount in cash or liquid assets, like U.S. government securities, in reserve.

Leveraging the combined capabilities of the companies in traditional and crypto markets will lead to the creation of a successful stablecoin for institutions, corporates, and private users, according to DWS Group.

DWS manages $927 billion in assets, while Flow Traders traded $3 trillion worth of assets in the first half of the year.

“This partnership is pretty unique because it combines the trustworthiness of a big asset manager, that of a highly successful market maker, and of a leading innovator in the crypto sector,” Höptner stated in a Bloomberg interview.

The move comes amid the newly adopted Markets in Crypto Assets Regulation (MiCAR) which led to an improved regulatory clarity in the EU digital assets space.

Stablecoin Market: The stablecoin market stands at a market value of around $130 billion mainly dominated by dollar-backed tokens, the major one being Tether’s USDT USDT/USD.

In the last two years, Euro stablecoins have not witnessed any significant demand, with monthly trading volumes averaging $90 million compared to an average of $600 billion for USD stablecoins based on Kaiko data provider.

Read More: VanEck's Predictions Include Bitcoin ETF Boom, Binance Losing Top Spot, Stablecoins Surging To $200B

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