We are thrilled to announce our lead investment in Schuman Financial, a fiat-backed stablecoin issuer dedicated to the European market. With this €7m fundraise, an experienced team which includes former Binance executives, and its traction to date, Schuman is in a strong position to transform the euro-denominated financial landscape with its fully MiCA-compliant stablecoin, EURØP.
TLDR: Schuman’s public launch couldn’t be coming at a better time. Until now, USD-denominated stablecoins have dominated DeFi–punching far above the USD’s weight in traditional markets. EUR-denominated coins have been a rounding error of total circulating stablecoins (less than 0.3% vs. 21% of global FX reserves.) We see three major tailwinds: regulatory clarity in Europe with MiCA, non-zero EUR interest rates which boost issuers’ profitability, and demand by non-US traders, who don’t want to take USD exposure or want to do DeFi in their native currency. Schuman is poised to capitalise on this unique moment and become the leading EUR stablecoin issuer.
Bridging the Euro Gap in the Stablecoin Market
USD-backed stablecoins are dominant today, accounting for over 99.5% of the $180 billion in circulating stablecoins. This reflects the U.S. dollar’s status as the global reserve currency, but the extent of its dominance on the blockchain is disproportionately high compared to traditional financial markets.
In traditional finance, the euro accounts for about 21% of global foreign exchange reserves and holds a similar share in international debt and SWIFT payment volumes. Yet, euro-denominated stablecoins represent less than 0.3% of the circulating supply and an even smaller fraction of trading volumes. This significant discrepancy raises the question: Why hasn’t the euro found similar prominence on the blockchain?
Historically, the lack of euro stablecoins can be attributed to three main factors: a lack of demand, limited incentives for issuers, and regulatory hurdles.
Lack of Demand
USD stablecoins became the default choice for crypto trading and DeFi activities. Their first-mover advantage, deep liquidity, and widespread acceptance made them the preferred option for traders globally. The speculative nature of the crypto market meant users were willing to convert their native currencies into USD stablecoins to participate in trading and investment opportunities. This left little room for euro stablecoins to gain traction.
Limited Incentives for Issuers
For stablecoin issuers, the business model revolves around investing fiat reserves into secure, interest-bearing assets like government bonds to earn income on user deposits. In a low or negative interest rate environment, as was the case in Europe pre-2022, issuing euro-backed stablecoins was therefore less attractive due to minimal returns on reserves. Consequently, due to the prominence of USD stablecoins as a unit of account, issuers focused resources on them, where alternative revenue sources — such as minting and redemption fees — were the highest.
Regulatory Hurdles
Regulatory uncertainty has also hindered crypto’s growth, and Europe’s lack of a clear regulatory framework for crypto assets delayed adoption of euro stablecoins.
Catalysts for Euro Stablecoin Growth
We see several factors contributing to a ripe environment for euro stablecoin adoption.
Regulatory Clarity with MiCA
The European Union’s Markets in Crypto-Assets (MiCA) regulation provides a comprehensive framework for crypto assets, set to become fully effective by the end of 2024. MiCA offers regulatory clarity that is crucial for building trust and encouraging the adoption of euro stablecoins among users, institutions, and service providers.
Non-Zero Interest Rates
European interest rates have risen and it seems like the zero / negative days are behind us. That is an obvious tailwind for euro stablecoin issuers, and incentivizes exchanges and market makers to support and distribute euro stablecoins, given the potential for profit-sharing arrangements.
Demand for Native Currency Trading
European traders and institutions increasingly seek to transact and hold assets in euros to avoid currency risk, reduce exposure to USD assets and streamline operations. As there is further institutional adoption of tokenized assets / RWAs within Europe — there will be demand for the local unit of account.
Use of Stablecoins in Payments
Stablecoins represent a major long-term opportunity for everyday payments. For instance, Uber paid $749 million in credit card processing fees in 2017, accounting for 2.2% of its transaction costs. Platforms like Uber, Airbnb, and Amazon could significantly reduce these costs by adopting stablecoin payments. Since many countries legally require the medium of exchange to be the local currency, there will be a growing need for non-USD stablecoins to meet these requirements.
Introducing Schuman Financial
Schuman Financial is uniquely positioned to capitalise on this emerging opportunity and become the leading euro stablecoin issuer.
Schuman is fully MiCA-compliant and has successfully acquired France’s first licensed stablecoin issuer, Salvus SAS, securing its Electronic Money Institution (EMI) and Electronic Money Token (EMT) regulatory licence. This is the best regulatory footing for stablecoin issuers and has been elusive to them in the past.
Their fiat reserves will be securely custodied with Société Générale, one of Europe’s top banks. This partnership not only ensures the safety of reserves, but also provides Schuman access to deep banking expertise, and, likely, seamless integration between traditional finance and DeFi.
The EURØP Stablecoin
Schuman is set to launch EURØP, a euro-denominated stablecoin designed to address the growing demand for euro-backed digital assets. EURØP is a fully MiCA-compliant electronic money token regulated under French law and audited by KPMG. It is pegged 1:1 to the euro and fully backed by cash and short-maturity euro-denominated assets.
EURØP is designed to facilitate on-chain FX trading, DeFi use cases, digital payments and to serve as a reliable unit of account. It is ideal for cost-effective cross-border payments and remittances, which are still stubbornly clunky or costly for businesses and individuals relying on traditional methods.
At launch, EURØP will be immediately listed on leading centralised exchanges and DeFi protocols. Initially available on Ethereum and Polygon, EURØP will expand to additional chains in the upcoming months.
The Schuman Team: A Blend of Crypto and Traditional Finance Expertise
Schuman Financial has an exceptional team. Stablecoins are the clearest intersection of TradFi and DeFi, so running an issuer well demands expertise on both sides of that coin. Schuman’s got it:
- Martin Bruncko (CEO): Former Vice President of Binance Europe, Martin has a rich background in European policy and finance, including roles at the World Economic Forum, European Commission, and European Stability Mechanism.
- Nicholas Pouzin (COO): With over a decade in investment banking and private equity, Nicholas was previously the Head of Principal Investments at RockawayX. His expertise spans major financial institutions like Morgan Stanley, MasterCard, and American Express.
- Eduardo Morrison (CBDO): Eduardo has a strong track record in building strategic partnerships, previously serving as Director of Institutional Sales, EMEA & LATAM at Binance.
Our Confidence in Schuman Financial
If timing is king, Schuman’s poised to reign. It’s entering the euro stablecoin market at the perfect moment, with the industry still in its early stages and ripe for growth. The company’s specialised focus on the European market, regulatory position, and the team’s strength give us high conviction that this one’s a winner.
We’re thrilled to support them as they pioneer the future of euro-denominated digital assets. Whether you’re a business aiming to leverage euro stablecoins, a trader seeking native currency options, or an individual interested in new options for sending euros across borders — Schuman Financial and its EURØP stablecoin is coming for your needs.
Check out Schuman’s website to stay ahead of the company’s and #EURØP developments and follow them @schuman_io so you don’t miss anything!
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