Societe General becomes first bank to launch USD-backed stablecoin

France’s Societe General will be the first bank to launch a USD-backed stablecoin that will be publicly traded, Reuters reports, citing a statement from the company. The bank is planning to issue the stablecoin —- a crypto token pegged to hard currencies like the USD and EUR — through its digital asset subsidiary, SG-FORGE. The currency, USD CoinVertible, is set to be tradable from July and will be issued on the Ethereum and Solana blockchains under the ticket USDCV. New York-based global financial services firm BNY will act as the token’s custodian.

More on USD CoinVertible: The token will be used for cross-border payments, FX transactions, crypto trading, and collateral and cash-management. The stablecoin is set to be offered on various, as yet unspecified, crypto exchanges; however, regulatory restrictions mean it won’t be available to US investors.

This isn’t Societe General’s first stablecoin venture, with the bank’s digital arm launching a EUR-backed stablecoin in 2023. However, this marks its first USD-backed issuance, with crypto pegged to the greenback gaining traction. SG-FORGE CEO Jean-Marc Stenger pointed to growing demand for a “well-regulated, robust offering in the crypto and stablecoin space,” noting that, “at the moment, there are no other banking-related players” offering a regulated USD-based stablecoin.

Other European banks are eyeing a piece of the pie: Deutsche Bank is also considering tapping into the stablecoin market by either issuing its own asset or joining a wider initiative, Bloomberg reports. Spain’s Banco Santander was also reported to be in the early stages of launching a stablecoin. Embracing stablecoin, which is dominated by USD-pegged tokens, is seen by some as a way for Europe to reassert “monetary sovereignty” — especially through EUR-backed assets, according to the Financial Times.

This comes amid growing regulatory focus on stablecoin, with the US set to pass a bill on a regulatory framework for stablecoins, Reuters reports elsewhere. The UK government is considering easing a current ban on certain retail investments linked to cryptocurrencies, the Financial Times reports. The UK’s planned regulatory framework would also cover stablecoins.

The for and against: Detractors of the US bill fear growing stablecoin adoption would add more volatility to the market. Supporters argue more stablecoin activity will drive up demand for buying short-term government debt, as a bill would require stablecoins to be backed by short-term assets like T-bills, and therefore reduce the current fiscal pressure resulting from high levels of long-term US government debt.

MARKETS THIS MORNING-

Asia-Pacific markets are up in early trading, buoyed by optimism from a breakthrough in trade talks between Washington and Beijing over rare earth mineral exports. The Hang Seng Index, Shanghai, Kospi, Nikkei, and ASX are all in the green so far this morning — albeit by a relatively slim margin. The optimism doesn’t seem to have carried over to Wall Street yet, where futures indicate the S&P 500, Nasdaq, and Dow Jones will all open in the red.

THE CLOSING BELL: TADAWUL-

The TASI rose 1.6% yesterday on turnover of SAR 4.6 bn. The index is down 8.6% YTD.

In the green: SIIG (+7.0%), Acwa Power (+6.7%), and Albabbtain (+5.4%).

In the red: SSP (‑6.3%), SRMG (‑2.3%), and Jadwa REIT Saudi (‑2.1%).

THE CLOSING BELL: NOMU-

The NomuC gained 1.0% yesterday on turnover of SAR 27.8 mn. The index is down 13.2% YTD.

In the green: Alrazi (+14.3%), Alnaqool (+9.4%), and Lana (+9.2%).

In the red: Academy Of Learning (‑6.5%), DRC (‑4.9%), and Azm (‑3.9%).

CORPORATE ACTIONS-

The United International Transportation Company’s (Budget Saudi) BoD recommended a 33.7% capital increase to SAR 1 bn, it said in a disclosure to Tadawul. The capital hike is set to be funded by tapping SAR 263.8 mn from retained earnings to support the company’s growth and financial position.

The details: Pending regulatory and shareholders’ approvals, the hike involves a 33.3% increase through a one-for-three bonus share issuance and a 0.4% increase by allocating 320k shares to a long-term employee incentive program.

ALSO- Saudi Steel Pipe Company’s shareholders approved the distribution of two separate banknote dividends totalling SAR 199.6 mn at SAR 3.95 per share for FY 2024, it said in a disclosure to Tadawul (pdf). The first payout is a regular dividend of SAR 1 per share for FY 2024, while the second is a one-time extraordinary dividend of SAR 2.95 per share paid with the company’s retained earnings. The distribution date for both payments is set for 22 June.

AND- Shareholders at View United Real Estate Development approved the distribution of SAR 9.9 mn in dividends for FY 2024 at SAR 0.3 per share, it said in a disclosure to Tadawul. The distribution date is yet to be announced.