When Deutsche Bank subsidiary DWS announced at the end of 2023 that it was setting up a digital asset joint venture with the two firms Galaxy Digital and Flow Traders, a murmur went through the German financial scene. At last, a big name was entering the market of the future. Named AllUnity, the start-up announced its intention to apply for an e-money licence that can be used to issue a euro stablecoin.

Stablecoins have so far mainly functioned as a dollar equivalent in blockchain ecosystems, and are the fuel for trading crypto assets, as everything remains on-chain with a stablecoin. The EU-wide regulation of euro stablecoins is now creating an environment that is interesting for institutional business.

DWS CEO Stefan Hoops had already been gathering techies around him for some time, which was probably also the inspiration to get AllUnity off the ground. Alexander Höptner, a well-known financial manager with blockchain experience (Stuttgart Stock Exchange, Bitmex), was appointed CEO of AllUnity at the end of 2023, and the C-level was expanded in October with the addition of Rupertus Rothenhaeuser (CCO) and Peter Großkopf (CTO and COO).

Großkopf is a real techie, having already founded one or two fintech companies and, like Höptner, has also worked at the Stuttgart Stock Exchange. „I joined AllUnity at a favourable time and found the right place for me to be innovative and productive – my job as CTO is to get the tech platform ready for the market and, as COO, to set up the organisation with all the processes so that the project becomes a company in collaboration with the team,“ says Großkopf in a conversation with Börsen-Zeitung.

AllUnity initially relied on external partners such as Noumena Digital and Finplanet for the rapid development of infrastructure and licensing procedures, while joint venture partner Galaxy Digital is also contributing tech infrastructure (for custody) via its subsidiary GK8.

They will start with the Ethereum blockchain and then probably support Solana next. Großkopf knows the Solana blockchain well. As a powerful layer-1-chain, it was to form the basic framework for the originally planned blockchain bank „Iron Bank“, which he set up with his colleagues from Unstoppable Finance. Then the framework conditions changed, and Großkopf joined what is probably the most exciting stablecoin project. With DWS, market maker Flow Traders, and industry giant Galaxy Digital, three partners have come together to have an impact in the market.

„As a product, stablecoins have what it takes to reach the masses. They are multifaceted, can be used in trading, work great in cross-border payments transactions, and are also already held in the private sector as a reserve, primarily as a dollar equivalent," says Großkopf. "It works because the stablecoin is linked to a real world asset.“

AllUnity has set itself the goal of launching stablecoin trading by the summer. The application process for authorisation as an e-money institution, which will then act as the issuer for the stablecoin, is currently underway at BaFin. „We are doing our homework in this regard and already have a certain track record as management in the regulated business, which is good for this process. I think we are on the right track.", he says.

In any case, Großkopf wants to ensure that the organisation is set up so that it is ready to enter the first phase of operations in the spring. The company is currently in the process of recruiting additional employees, with a target of around 30 once the organisation has settled down. Recruitment is going well because everyone in management is well wired in the intersection of banking and tech. As the AllUnity project has been attracting attention, unsolicited applications are also coming in. „We are already preparing a number of partnerships with market players, the first of which is with 21X," he explains. "But this is also a question of timing, as long as we don't yet have the licence in our hands. And my priority at the moment is to build up the tech and team in parallel so that the processes are in place for the market launch.“

So far the stablecoin landscape looks like this: The Société Générale subsidiary SG Forge is already on the market with its euro stablecoin EURCV (40 million euros in circulation), as is Circle with EURC (90 million euros in circulation), and Banking Circle with EURI. Paxos from the USA obtained the e-money licence through the acquisition of the Finnish company Membrane. And the market leader Tether, which generates billions in profits per quarter, has decided not to establish MiCAR compliance for its USDT stablecoin, and is instead going through authorised partners such as the German-Dutch Quantoz, with tokenisation running via Tether's tech platform Hadron.

The market is therefore already in motion, which is also due to the fact that the stablecoin chapter of MiCAR was already implemented in the middle of last year. The elephant in the room is the possibilities of asset tokenisation for everything that belongs or can belong to the world of securities. „The settlement of native crypto-assets is one thing, the settlement of Mifid assets is another," says Großkopf. "Combining these under one roof is something that 21X, for example, where Alexander Höptner and I are on the Supervisory Board, is doing with its DLT systems as part of the EU pilot regime. The advantages of immediate settlement and transparent and automated post-trading are huge. I am therefore convinced that this will prevail in the long term.“

For the time being, however, AllUnity still has one or two nuts to crack: The Basel regime stipulates risk premiums for stablecoins that are stored on public blockchains. Repo transactions will also be made more difficult. The standard setters see risks as blockchains of this kind are decentralised, but possibly not decentralised enough, so that individual players might gain too much control over such a system. For Großkopf, however, one thing is certain: „Public blockchains are the only true solution, because only in this setup can the advantages of DeFi, such as speed, be fully utilised."

But he acknowledges that the regulators have a valid point. „The ecosystem of layer 1 blockchains still needs to become much more decentralised,“ he says. "However, the banks themselves could contribute to this by operating Ethereum or Solana nodes, for example, and thus contribute to stability, making 51% attacks impossible.“