‘Worst code I’ve ever seen’: Euro stablecoin faces centralization criticism

Criticism has been leveled at a new euro-pegged stablecoin released in France due to a decision to restrict peer-to-peer transactions.

French bank Societe Generale-Forge (SGF) released the Ethereum-based stablecoin called EUR CoinVertible (EURCV) on April 20 which is available to only qualified institutional clients.

According to observers who reviewed its smart contract code, ERC-20 transfers need to first be approved by a centralized registrar — presumably one controlled by the bank — before the transaction is processed.

In an April 20 tweet, pseudonymous smart contract engineer “alephv.eth” explained:

“They coded it so they have to whitelist all users, process all user transfers, and even process your ERC20 approvals before they process your 'transferFrom' lmao.”

She further mocked the code in a separate post, stating it was a "radical commitment to inefficiency in the name of regulation."

Nonfungible token (NFT) project founder “foobar” tweeted to his over 127,000 followers on April 20 that it’s “the worst code I’ve ever seen” and described the stablecoin as a “laughing stock.”

France launched a stablecoin on Ethereum and it's the worst code I've ever seen
Every ERC20 single transfer has to be approved in a separate eth tx submitted by a centralized registrar
What a laughingstock, is this your CBDC?https://t.co/hKkHiQTCyN pic.twitter.com/S6tRfh54wz

— foobar (@0xfoobar) April 20, 2023

Crypto researcher Mason Versluis also tweeted the code was “absolutely horrible” and suggested the French bank “stop trying to weasel” into crypto.

BREAKING: France launches stablecoin on #Ethereum, but every single transfer has to be approved in a separate ETH transaction submitted by a centralized registrar!
Absolutely horrible. Keep your centralized bullshit over there, stop trying to weasel it into crypto.
News Via:… pic.twitter.com/mcg9fvUoSp

— MASON VERSLUIS (@MasonVersluis) April 20, 2023

Plenty of others chipped in on the criticism, but Ether (ETH) investor Ryan Berckman provided a more neutral analysis.

He explained that many traditional financial firms like SGF will take “baby steps” as they move into blockchain and digital assets:

“Obviously, non-compliant, non-composable, allowlist-style stables are going to be uncompetitive in the market. Baby steps, they are coming from tradfi, they'll see it soon enough and switch to a USDC-style denylist.”

Berckman explained SGF may also be incorrect in its claim to be the first bank to launch an institutional stablecoin on a public blockchain. He pointed to the AUDN stablecoin minted by the National Australia Bank (NAB) on Ethereum in March, which claimed to be the second bank to launch a stablecoin.

Regardless, Berckman expects more banks to follow suit in the months to come, stating that he is “certain” SGF won’t be the last bank to launch a stablecoin on a public network.

Related: Israel’s central bank says CBDC could be issued if stablecoin use increases

SGF’s stablecoin isn’t intended for public use — at least to begin with.

EURCV is only strictly available to institutional clients onboarded by the bank through its Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures, according to the bank’s April 20 announcement.

The stablecoin is designed to bridge the gap between assets in traditional capital markets and the digital assets ecosystem.

A total of 10 million EURCV tokens were minted on Ethereum three days ago according to Ethereum explorer Etherscan. All 10 million tokens are held by one wallet address.

The stablecoin was launched on the back of growing demand for a new settlement asset to process on-chain transactions.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom