Circle looks to make France its European home base after USDC de-peg
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(Kitco News) - Circle, the firm behind the issuance of the stablecoins USD Coin (USDC) and Euro Coin (EUROC), has announced that it is looking to expand its operations to France and has applied to become a licensed Electronic Money Institution and a registered Digital Asset Service Provider (DASP) under the country’s strict financial regulations.
If Circle succeeds in gaining full approval from the Autorité des Marchés Financiers (AMF), it would become the first company to receive full authorization under the DASP regulations.
This move is being done as part of Circle’s ongoing effort to expand its operations in Europe, which began with the launch of EUROC. Circle is now looking to establish France as its home base of European operations, and a registration with the AMF will enable the firm to offer a suite of products and services to customers in the region while remaining in full compliance with local regulations.
Once granted permission as a Prestataire de service sur actifs numériques (PSAN) institution, Circle will be able to on-shore EUROC, which is fully backed by reserves, and begin the process of enabling EUROC to become a Markets in Crypto-Assets (MiCA) conforming e-money token once the legislation is finalized and enacted.
"We are excited to kick our European growth strategy into high gear with this application,” said Jeremy Allaire, Co-Founder and CEO of Circle. “The DASP registration provides an initial path to support sensible digital asset innovation. Further, we aspire to become one of the first companies to achieve full authorization under the reinforced PSAN licensing regime, and hope that our growth plans for the country will strengthen its position as a global hub for innovation."
While there is no formal indication of whether the application will be successful, there is a good chance that it will ultimately be approved as the country has made known its intentions to become a crypto hub for the European region.
"This decision fully validates France's ambitions to become a hub for Web3 technologies,” said Jean-Noël Barrot, Minister Delegate to the Ministry of Economy, Finance and Industrial and Digital Sovereignty, in charge of Digital Transition and Telecommunications. “Circle's choice is one more important proof that the French government's policy measures aimed at fostering the growth of an innovative crypto-asset sector, designed to be robust and secure, is fully paying off. We are more convinced than ever that France has all the assets to become a global reference for blockchain-based innovation and digital economy."
Circle is currently licensed as a money transmitter across 48 jurisdictions in the U.S. and holds in-principle approval as a Major Payments Institution License holder in Singapore. It is now looking to establish itself as a regulated entity in Europe that offers fully-reserved, fiat-backed digital currencies that can help promote financial inclusion and empower businesses through the integration of cost-effective global payments.
|Bank regulator, not SEC, should oversee stablecoins - Circle CEO|
This move to expand comes after Circle was able to successfully navigate the brief loss of the dollar peg by its USDC stablecoin amid the collapse of Silicon Valley Bank (SVB) in the U.S. SVB held $3.3 billion of the cash reserves that backed USDC, the world’s second-largest stablecoin, and its insolvency threatened the credibility of Circle’s claim that USDC was fully-backed.
This led many USDC holders to start dumping the token for other tokens or stablecoins out of fear that USDC would collapse in a similar fashion as TerraUSD (UST) did in May 2022 and spark another contagion wave that roiled the crypto ecosystem. USDC hit a low of $0.90 on March 11 but was able to regain its peg by March 13 after the U.S. government stepped in and guaranteed all SVB deposits.
Reports have also emerged that Circle’s partner in the issuance of USDC, the Coinbase crypto exchange, had also offered Circle a $3 billion credit facility meant to guarantee the liquidity of USDC before the government backstopped the bank deposits.