(Bloomberg) -- Deutsche Bank’s DWS Group, Dutch market maker Flow Traders Ltd. and crypto fund manager Galaxy Digital Holdings Ltd. are planning to form a company to issue an euro-denominated stablecoin, with the goal of driving more mainstream adoption of tokenized assets.

Called AllUnity, the company will be based in Frankfurt and led by Alexander Höptner, a veteran exchange executive and the former chief executive of crypto platform BitMex, the firms said in a statement Wednesday. AllUnity plans to apply for an e-money license with Germany’s financial watchdog BaFin, with the intention of launching its fully collaterized stablecoin within the next 18 months. 

The firms are looking to take advantage of their combined reach in traditional and crypto markets to create a successful stablecoin for institutions, corporates and private users, they said. DWS, which is majority owned by Deutsche Bank, oversees €860 billion ($927 billion) in assets, while Flow Traders traded €2.8 trillion ($3 trillion) worth of assets in the first six months of the year, and has been active in crypto since 2017. Galaxy Digital, which is led by well-known investor Michael Novogratz, offers businesses ranging from crypto trading and asset management to mining.

“You need to have the stability, the trust, the connection and market power to make stablecoins really viable and usable,” Höptner said in an interview. “This partnership is pretty unique because it combines the trustworthiness of a big asset manager, that of a highly successful market maker and of a leading innovator in the crypto sector.”

The joint effort is the latest push by large firms looking to enter the market for stablecoins, crypto’s most traded tokens which are usually pegged one-to-one with a traditional asset such as the dollar. Their low volatility has made them popular with crypto traders looking to move in and out of positions, or transfer funds between platforms. They’ve also become more useful for firms looking to move money across borders, facilitate faster and cheaper digital payments and those looking to trade and settle traditional assets such as bonds using blockchain technology. 

The cryptoasset subsidiary of French bank Societe’ Generale listed its euro-denominated stablecoin EUR CoinVertible on crypto exchange Bitstamp last week, while Silicon Valley-based payments giant PayPal Holdings Inc. rolled out a dollar stablecoin earlier this year. 

While the stablecoin market has grown to a total value of around $130 billion dollars, it has been largely dominated by dollar-backed tokens, the largest of which is Tether’s USDT. Euro stablecoins have not seen significant demand in the last two years, with their monthly trading volumes averaging $90 million, compared an average of $600 billion a month for US dollar-denominated stablecoins, according to data provider Kaiko. 

The European Union’s new sweeping regime for cryptoassets, which includes rules on stablecoins, offers a clearer path for financial providers looking to enter the market and may trigger greater adoption of euro-denominated tokens, Höptner said. Usage may also benefit from a recent increase in tokenization of traditional assets by large firms, Höptner said. “The use cases and the regulatory framework were missing,” he said. “And now the regulatory framework and uses cases are there.” 

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To maintain the token’s value, stablecoin issuers will typically hold a amount in cash or liquid assets, such as US government securities in reserve. In an environment of rising interest rates, this model has become a lucrative business for stablecoin issuers. The plan is for DWS to manage the proposed stablecoin’s reserves, Höptner said. 

DWS signed a deal with Galaxy in April to develop a suite of exchange traded funds for the European market, while in the US, large asset managers including BlackRock and Fidelity Investments have filed applications for Bitcoin ETFs.

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AllUnity is expected to launch in the first quarter of 2024, after it has received initial regulatory approvals, but will only launch its stablecoin after being granted the full e-money license, according to the statement. 

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