• Greenback paper currency’s global status has made the crypto-economy tether with USD.
• However, e-Money blockchain’s EUR stablecoin brings solutions to offramp the dollar.
• Russia, China and many other countries explore alternatives to the US Dollar.

While the US dollar remains the focal point of global market attention, it has been more so in recent years. Questions marks over the greenback’s supremacy continue to swirl, buffeted by the winds of change that seem destined to gather momentum following the US government’s imposition of sanctions on Russia. Jerome Powell, Chairman of Federal Reserve recently spoke out in favor of other currencies as a reserve currency.

Russia isn’t the only nation-state exploring an alternative to the dollar, incidentally; its close ally China is in the same boat, with both nations having stepped up their hoarding of gold in recent years. Russia and India also stopped using dollars for mutual settlements. All payments were made in rubles or rupees. Saudi Arabia is reported to be considering selling oil in China for the yuan, instead of USD.

So, where do these shifting sands leave crypto’s booming stablecoin market, most of which is denominated in US dollars? Stablecoins reached $6 trillion in total value last year. It is estimated that the market worldwide now exceeds $185 Billion. A large portion of this volume comes from USD collateralized USD. Astonishingly, the two best-known dollar-pegged crypto-assets – (USDT) and (USDC) – represent the lion’s share of the aforementioned pie, with a combined market cap of $132.5 billion.

Stablecoin instability

Due to the greenback’s global reserve status, large swathes of the world economy are overexposed to the asset. The same is true for crypto-economy, as many projects’ fortunes are tied to USD-denominated stabilitycoins.

And that’s not the only problem. Independent of the dollar’s precarious position, stablecoins have long been the subject of interest from regulators, not all of whom are convinced about their redeemability. Last year, the Commodity Futures Trading Commission (CFTC) slapped Tether with a $41 million fine for making“untrue or misleading statements and omissions of material fact” in relation to its dollar reserves.

The Treasury, Federal Reserve and Securities and Exchange Commission (SEC), along with the CFTC, released a report in November proposing to limit stablecoin issuance for entities whose deposits have been fully insured as per US law. The constant regulatory oversight has led to fear, doubt, and uncertainty in the stablecoin markets. Talk of the US Central Bank Digital Currency has not done much to ease these sentiments.

A US CBDC launch would certainly put more pressure on the existing stablecoins. Some of these unstablecoins suffer from lack of transparency (no evidence of funds), and use collateralized assets to keep their value. Liquidations are possible in the event that a collateralized asset loses its value suddenly.

Euro-Backed Stablecoin Offers Dollar Off-Ramp

Some stablecoins may not be denominated only in dollars. e-Money’s full collateralized interest-bearing stablecoin, eEUR, represents a convenient offramp from the dollarized system, enabling users to transact with a collateralized, audited stablecoin of the fiat used by 19 of the European Union’s 27 member states.

Available on several blockchain ecosystems – , Cosmos ecosystem and soon to make its debut on – eEUR is fully compliant with European regulations and relies on a dynamic peg that tracks the underlying interest rate, suitable for positive and negative interest rate environments. Unlike some questionable projects, the Danish fintech firm’s stablecoins are entirely backed by bank deposits and low-risk government bonds held by commercial European banks. For peace of mind, proof of funds reports are published by Ernst & Young every quarter.

Positioned to become a sort of “circle for the Eurozone”, eEUR is intended for use in decentralized finance applications such as liquidity mining programs, as well as for long-term store of value and as a fiat on/off ramp for crypto traders. With the dollar facing increasing pressure from both regulators and wider global events, euro-backed stabilitycoins such as eEUR can be used to reduce their exposure to one currency. What’s more, e-Money’s native payment network comes with the added bonus of near-zero transaction fees and immediate finality.

The future of the US currency is in danger? Perhaps it’s too early to say. It’s a reason to celebrate the long-awaited appearance of stable, liquid options within the crypto ecosystem.

Disclaimer:CoinQuora is not a sponsor of any individual or company mentioned in this sponsored article. The information contained in the sponsored article should not be considered financial advice. Everybody is encouraged to research cryptocurrency before making any investment.

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