French banking giant Societe Generale has unveiled a euro-denominated CBDC stablecoin. However, the crypto developers were quick to identify potential problems with its code.
On April 20, Societe Generale (SG) announced the launch of a euro stablecoin called “CoinVertible.” The asset is based on the Ethereum blockchain and has the EURCV ticker.
However, the new stablecoin issued by the bank is only available to educational clients, according to SG. It stated that EURCV “is limited to investors who are brought in by the Societe Generale group through the existing compliance procedures (KYC / AML-CFT)”.
The bank emphasized that it was fully backed by “a secure legal structure ensuring (the full segregation of collateral assets held to support the value of stablecoins from the issuer).
Moreover, the launch It comes as European MiCA cryptocurrency regulations get the final nod from the European Parliament.
Anatomy of the SG Stablecoin Token
However, not all is as it seems with the bank’s institutional stablecoin. Being an ERC-20 token meant that the underlying smart contract token was available for inspection.
Many cryptocurrency developers have already found many issues with it, some of them rather worrying.
DeFi developer “0xfoobar” notice Transfers need additional centralized transactions for approval.
“Each single ERC20 transfer must be approved in a separate ETH transaction submitted by a central registrar. What a joke, is this your CBDC?”
“What if we made ERC20 but instead of settling in seconds you still had to wait for a back office fax,” he quipped.
Software engineer “@0xCygaar” found deceptive phrases buried in the stablecoin’s code.
“SG-Generale’s new stablecoin pegged to the euro has a function that allows them to take all of your money.” He said.
“There is also a function that allows them to burn your money as well,” the developer noted.
Ethereum-dependent stablecoins will face serious scaling issues with these restrictions. However, since it is only available to the bank’s institutional customers, it is unlikely to gain much traction.
Dangerous precedent for CBD
Societe Generale has set a dangerous precedent for central bank digital currencies. This indicates the bank’s control over the asset. This includes what it allows users to do with it.
Warnings about CBDC deployments have been issued by lawmakers in the US and globally. Earlier this year, Congressman Tom Emmer introduced the Anti-CBDC Surveillance Act.
The bill provides a provision to prevent the Federal Reserve from using a central bank digital currency to implement monetary policy and control the economy.
Others have warned that a central bank digital currency could be used to control people’s spending or impose restrictions to reduce carbon.
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