After the Consensus 2018 event on Tuesday, we had the chance to sit down with STASIS CEO Gregory Klumov to talk about EURS, an ambitious project his company is launching today. EURS aims to create the world’s first crypto-Euro and compete with Tether’s dominance on the market for a cryptocurrency with a 1:1 pairing with fiat money.
The difference here is that EURS is an EIP20 token that runs on the Ethereum blockchain and goes through all of the necessary procedures to reassure investors that there is value in each coin.
Mr. Klumov started the conversation by telling us a bit about what STASIS is doing:
GK: Basically, what we’re trying to achieve is to take the market share of Tether because our product will be much more comfortable for users to trade with. There will be daily verifications by a “big four” firm (KPMG), and we’ll utilize a legal framework around a subscription and redemption process, which we can facilitate not only through traditional banking systems but through financial assets like securities, treasury bonds, fixed income securities like Eurobonds, or any stock.
So, imagine that a client can send us any existing traditional security, we transparently sell it on the market and credit the funds from our brokerage firm [...] and issue the client crypto-Euros instead—or, let’s say, crypto-Tethers backed by Euros. And then, everybody can see the daily verification of the balances on the asset side and the liabilities are on the blockchain.
We’ll be using the Ethereum blockchain as a network. The transparency there is on-demand by design and any kind of customer can see what tokens are issued and where they are moving. With regard to token movements, we are pioneering a technology called “delegated transfer,” so by using our wallet, you could transfer our token without having Ethereum on your wallet. And that’s quite a new initiative because we think it could be the EIP20 standard going forward.
CV: How does STASIS address the problems inherent in USDT, where investors have the perception that it’s a “shady” cryptocurrency?
GK: USDT has its problems because of three things.
First, it promises nothing. Legally, when you own Tether, they say on their website that they promise nothing in return.
Secondly, they are shadowing the banking system, so they can’t easily transact with them. There’s no way for you to subscribe to and redeem for Tether.
And thirdly, nobody knows what the underlying assets are or how much fiat they have in their reserves. We can see the outstanding amount of tokens issued on the blockchain, which is about 2.2 billion as we speak. But nobody could really have confidence that they have assets backing that. Whatever people know is based on rumors. Nobody can prove in an ‘auditable’ manner that the assets are there.
And this is the reason people are afraid to get in bed with Tether. They trade it, they move their digital assets into Tether only for small periods of time, but they are afraid to stay in it for a longer time.
CV: I’d imagine that for EURS to work, it needs to have partnerships with some major banks…
GK: Well, not only banks. Again, like I said, we have our partners in place who can help us avoid the banking system completely. We don’t need banks to transact in and out of a digital economy. But you are right in the sense that we need a trading venue, like exchanges.
CV: And liquidity…
GK: Yes, and liquidity. Exactly. So, this is where our expertise kicks in. I was a hedge fund manager for 15 years, and I know how to trade markets, and I’m a programmer by my certifications. We will make liquidity and markets using two of our partners as trading venues.
Once we establish a market and make sure that everything works well on two exchanges, we’ll move to other exchanges. We have a vast number of very famous and old exchanges in the pipeline—one of our partners was the first to create the world’s first Bitcoin fund in 2012. We actually provide a lot of business to major crypto exchanges and once we release our crypto-Euro DSX—a UK-based exchange, our first partner—we’ll move onto the more famous ones that [current cryptocurrency investors] are more familiar with.
CV: I’m very curious about what kind of protocol you have in place for anti-money laundering.
GK: We inherited the rules that exist for European brokerage companies. We get a proof of address and an ID from a person. And, of course, we work with all existing European regulations to on-board these clients. Initially, we will work only with institutional points of first contact. That way, we’ll face institutional money managers. Some of them are registered in Malta, and we can facilitate Malta-to-Malta transactions freely right now.
Over the next couple of months, the number of jurisdictions will expand, but the secondary market will be available to everybody. Since we will trade on the primary markets through subscription agents, there will be plenty of liquidity and every digital investor, holder, and trader will be able to transact with our stable coin.
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