Ever since Malta passed three new crypto bills into law, it has become a hotbed of crypto activity. The country has enabled companies to push harder than ever before, pioneering the crypto industry. The latest crypto innovation coming out of Malta is in the form of a new stablecoin – EURS. Stasis – the company behind the tokenized Euro stablecoin – is a Maltese registered crypto start-up. Stablecoins are tied to a fiat currency – such as the Euro, Dollar, or Yen – and give crypto traders a way to protect themselves from volatility, without completely changing back into fiat.
How do Stablecoins Work?
In order for a stablecoin to work, we need centralization – after all, we are dealing with fiat currencies. Now, we need to be able to trust the custodian. When you purchase a stablecoin, you essentially transfer Euros – or whatever fiat currency the stablecoin is pegged against – and in return you get the same number of the stablecoin. These coins can then be traded on exchanges for crypto. If the fiat custodian can be trusted and actually keeps the reserves of fiat, the price of the stablecoin will remain at a value of 1:1. This makes it ideal for crypto traders that are looking to protect themselves from volatility. The stablecoin issuer – in this case Stasis – will keep Euros in a client fund account – similar to how traditional financial services firms do.
The Arrival of a Euro Stablecoin?
Traditionally, most stablecoins are pegged to the USD or Yuan. This is due to the fact that almost every exchange gives the price of major cryptos in these currencies. However, with the rise of Malta in the crypto world thanks to their new crypto-friendly laws, more exchanges are starting to open up shop on the sun-soaked Mediterranean archipelago. This has led to a demand for a Euro pegged stablecoin for European investors that want to save exchange fees transferring their Euros into Dollars. This would also allow for hedging against EUR/USD price fluctuations. This new addition of a Euro stablecoin brings us one tokenized fiat closer to Jeremy Alliare’s prediction that all fiats will be tokenized.
The Issue with Stablecoins
The most well-known stablecoin – Tether – has earned a bad reputation and is embroiled in a market manipulation controversy. A large portion of the crypto community believe it doesn’t have the necessary fiat reserves required for the amount of USDT it has issued. This implies it has simply printed money out of thin air. As a result of this, the wider crypto community now sees new issues of USDT as a signal the Bitcoin price will suddenly jump. This is the only real major flaw with stablecoins – and the fact they are centralized which Vitalik Buterin hates.
Stasis is Here to Stay
Stasis has put a lot of work into ensuring they comply with all of Malta’s regulatory requirements, and even employs one of the big four external auditing firms to verify it does in fact have enough reserves of Euro to issue EURS. The team behind Stasis are IT and finance veterans with a vast wealth of knowledge. The Stasis team have been collaborating with the Maltese Government since 2012 to help develop cryptocurrency and blockchain legal frameworks, and have been instrumental to the success of the most recent crypto-friendly laws.
Stablecoins are currently a multi-billion-dollar market – a number that is expected to grow as more institutional investors enter the crypto markets. Stasis and the EURS opens the door to a new raft of institutional investors from the Maltese islands and beyond. There is a bright future ahead for Stasis and the EURS, so it could be a case of watch this space.