The issuance comes at a time when the European stablecoin market is poised for a shake-up as regulations for issuers will enter into full force by the end of this year.

Updated Nov 18, 2024, 10:24 a.m. Published Nov 18, 2024, 7:30 a.m.

As stablecoins gain traction, Netherlands-based fintech firm Quantoz aims to take a slice of the European market.

The company will issue the regulatory-compliant stablecoins pegged to the euro (EURQ) and U.S. dollar (USDQ) on the Ethereum blockchain. The tokens are fully backed by fiat reserves and highly-liquid financial instruments like government bonds, the firm said on Monday.

The firm has obtained the Electronic Money Institution (EMI) license from the Dutch Central Bank, a necessary requirement for stablecoin issuers to operate in the EU. Quantoz has secured investments from venture capital firm Fabric Ventures, crypto exchange Kraken and stablecoin behemoth Tether, though it didn't disclose the size of the fundraising round.

EURQ and USDQ will first be listed on Bitfinex and Kraken and available for trading to eligible users starting Thursday.

Stablecoins, are tokens pegged to fiat currencies, have grown to a $180 billion asset class within cryptocurrencies and are a key piece of infrastructure for the digital asset market. They serve as liquidity to buy and sell crypto on exchanges, and are getting increasingly popular for everyday payments and remittances due to cheaper and faster settlements on blockchains compared to traditional banking rails.

Quantoz's rollout comes at a time as crypto businesses in the EU are in crunch time before region-wide rules (MiCA) to operate within the trading bloc will enter into full force by the end of this year. MiCA requires stablecoin issuers to get compliant or potentially retreat from the market of 450 million consumers as regulated players such as exchanges delist unauthorized tokens. While Circle, the company behind the $36 billion market cap USDC, said that it fulfilled the requirements to operate in the region Tether has been a vocal critic of the new rules and is yet to obtain the necessary licensing.

"There's a gap in the stablecoin market here in Europe, and we see that as an opportunity," Arnoud Star Busmann, CEO of the firm's payments-focused subsidiary Quantoz Payments, said in an interview with CoinDesk. "We are confident that our tech and regulatory compliance put us in a good position to fill that gap, especially now that we have strong partners like Kraken and Tether."

Stablecoins can be impactful in areas where traditional banking infrastructure falls short, such as high-volume, low-value transactions, Busmann said. "Imagine being able to move cash in and out of money market funds without the traditional delays of T+1 or T+2 days."

Quantoz also has a tokenization business, a red-hot trend in crypto of creating digital versions of traditional financial instruments such as bonds. Tokenized assets combined with stablecoins can also offer a more efficient way for businesses and institutions to manage their treasury, thanks to their near-instantaneous settlement instead of one or two days of delay, he explained.

"We are building an ecosystem that can support a wide range of use cases, from everyday payments to more complex financial transactions," Busmann said.