In a recent collaboration, Deutsche Bank’s asset management arm DWS Group, Dutch market maker Flow Traders, and crypto investment firm Galaxy Digital have announced plans to form a company called AllUnity. The trio aims to launch a euro-backed stablecoin, which will be fully collateralized and issued by AllUnity. The new stablecoin is expected to drive more mainstream adoption of tokenized assets by leveraging the combined reach of traditional and crypto markets.
Crypto Meets Finance in AllUnity
The partnership between DWS Group, Flow Traders, and Galaxy Digital is a unique one. DWS Group, which is majority owned by Deutsche Bank, oversees €860 billion ($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 crypto market since 2017.
Galaxy Digital, led by Michael Novogratz, offers businesses ranging from crypto trading and asset management to mining. The collaboration brings together the trustworthiness of a major asset manager, the market power of a successful market maker, and the innovation of a leading crypto player.
AllUnity will be based in Frankfurt and will apply for an e-money license with Germany’s financial regulator, BaFin. The company aims to launch its fully collateralized stablecoin within the next 18 months. The regulatory approval process is crucial for the success of the stablecoin, as it will ensure that it meets all necessary legal requirements. Once AllUnity receives initial regulatory approvals, it is expected to launch in the first quarter of 2024. However, the stablecoin will only be launched after receiving a full e-money license.
Demand for Euro-backed Stablecoins
The stablecoin market has grown significantly in recent years, with a total value of around $130 billion dollars. While dollar-backed tokens dominate the market, euro-denominated tokens have not seen significant demand in the past two years.
According to the data analysis by Kaiko, monthly trading volumes for euro stablecoins average $90 million compared to an average of $600 billion a month for US dollar-denominated stablecoins.
However, the EU’s new regulatory framework for crypto assets may trigger greater adoption of euro-backed 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 firms could also benefit usage.
In Summary, Euro-pegged stablecoin AllUnity aims for rock-solid stability by hoarding cash and top assets, like US bonds. This seems to be a profitable strategy, amplified by rising interest rates, and is in the trusted hands of DWS Group’s financial wizards. This powerhouse team of traditional and crypto giants could be the key to unlocking wider adoption of tokenized assets.