One of Europe’s oldest banks, Bankhaus von der Heydt (BVDH), has issued a Euro stablecoin (EURB). Working in conjunction with Bitbond, the financial institution says this is the first bank-backed Euro stablecoin of its kind. It will run on the Stellar network.
However, despite being a non-profit alternative to XRP, Stellar has been cozying up to banks. Some believe the company plans to be the network that all countries will run their Central Bank Digital Currencies (CBDC) on, once ready for launch.
The collaboration between Bitbond, Germany’s largest crypto custodial service, BVDH, and Stellar fits into this narrative. By hosting a Euro stablecoin, Stellar may demonstrate its potential utility as a CBDC platform.
Bringing Banks Into the Mix
While BVDH (formed in the 18th Century) has traditionally focused on institutional clients and the need for secure transactions, it only recently explored Digital Ledger Technology (DLT). Bitbond provided its tokenization technology, which apparently impressed BVDH enough to adopt it.
In a press release, Bitbond CEO Radoslav Albrecht said:
“Bitbond has been working with Stellar since 2019, when we issued the first ever tokenized security recognized by the Federal Financial Supervisory Authority (BaFin), the financial regulatory authority for Germany.”
Bitbond created a special platform for use by BVDH. It includes the capability of burning and minting new tokens. Likewise, the technology can facilitate stablecoin purchases from traditional bank accounts.
Stellar said that the EURB stablecoin could be used by BVDH customers as well as third parties. For now, its utility is primarily for settling digital transfers on-chain.
Albrecht said that the implementation of this technology has “completed” the Bitbond tech suite (which provides asset custody and tokenization).
The EURB coin will be backed 1:1 in stablecoins. While the technology currently only supports on-chain settlements, BVDH plans to move ahead with tokenization services for other large clients.
Technology such as this has gained notable interest recently in the race to develop CBDCs. China has successfully tested a digital yuan, and smaller countries such as the Bahamas have launched their own versions.
With the growth of CBDCs, companies like Stellar intend to build the infrastructure upon which the digital currencies are built. Whether each CBDC will create its own blockchain or use existing technology remains unclear. Landing a client like the US Federal Reserve, however, would be a boon to any business.