Deutsche Bank, Flow Traders and Galaxy Digital Join Forces to Launch Euro-Backed Stablecoin
In a recent collaboration, Deutsche Bank’s asset management arm DWS Group, Dutch market maker Flow Traders and cryptocurrency investment firm Galaxy Digital announced plans to form a company called AllUnity. The trio aims to launch a euro-backed stablecoin that will be fully collateralized by AllUnity. The new stablecoin is expected to leverage the combined reach of traditional and cryptocurrency markets to further drive mainstream adoption of tokenized assets.
Cryptocurrency and finance meet at AllUnity
The partnership between DWS Group, Flow Traders and Galaxy Digital is unique. DWS Group, majority owned by Deutsche Bank, oversees 860 billion euros ($927 billion) in assets. Flow Traders traded €2.8 trillion ($3 trillion) worth of assets in the first six months of 2021 and has been active in the cryptocurrency market since 2017.
Galaxy Digital, led by Michael Novogratz, offers a variety of businesses ranging from cryptocurrency trading and asset management to mining. This collaboration brings together the credibility of a leading asset manager, the market power of a successful market maker, and the innovation of a leading cryptocurrency company.
regulatory approval
AllUnity will be headquartered in Frankfurt and will apply for an electronic currency license from BaFin, the German financial regulator. The company aims to launch a fully collateralized stablecoin within the next 18 months. The regulatory approval process is critical to the success of a stablecoin as it ensures that all necessary legal requirements are met. If AllUnity receives initial regulatory approval, it is expected to launch in the first quarter of 2024. However, the stablecoin will only be launched after receiving a full digital currency license.
Demand for Euro-backed stablecoins
The stablecoin market has grown significantly in recent years, reaching a total value of approximately $130 billion. While dollar-backed tokens dominate the market, euro-denominated tokens have not seen much demand in the past two years.
According to Kaiko’s data analysis, the average monthly trading volume for euro stablecoins is $90 million, while the average monthly trading volume for US dollar-denominated stablecoins is $600 billion.
However, the EU’s new regulatory framework for crypto assets could spark greater adoption of euro-based tokens as it provides a clearer path for financial providers looking to enter the market. Additionally, the recent increase in tokenization of traditional assets by large corporations may also be helpful.
to sum up, AllUnity, a stablecoin pegged to the euro, aims for rock-solid stability by stockpiling major assets such as cash and U.S. bonds. This appears to be a profitable strategy, amplified by rising interest rates, and is in the trusted hands of the financial wizards of DWS Group. This powerful team of traditional and cryptocurrency giants could be key to broader adoption of tokenized assets.