PARIS, June 10 (Reuters) -

France's Societe Generale said on Tuesday it plans

to launch a publicly tradable, dollar-backed stablecoin through

its digital asset subsidiary, making it the first major bank to

enter the growing market of dollar-pegged cryptocurrencies.

The new digital currency, named "USD CoinVertible", will

be issued on both the Ethereum and Solana blockchains, with

public trading expected to start in July, SocGen's crypto arm

SG-FORGE said in a statement on Tuesday. BNY Mellon will serve

as the custodian for the stablecoin's reserves, the bank said.

Stablecoins are a type of cryptocurrency typically pegged to

a traditional currency, usually the dollar, allowing people to

move large sums of money using blockchain networks instead of

traditional banking payment systems.

The sector has seen rapid growth, driven by crypto company

Tether, which has issued $155 billion of its dollar-pegged

tokens.

SG-FORGE launched a euro-based stablecoin in 2023, although

it has not been widely adopted, with just 41.8 million euros

($47.62 million) in circulation, according to its website.

SocGen said its stablecoins are classed as e-money tokens

and will be regulated under MiCA, the European Union's landmark

crypto regulation adopted in 2023.

Tether does not have a licence to operate in the European

Union under MiCA.

Jean-Marc Stenger, CEO of SG-FORGE, said that there was

demand for a regulated dollar-based stablecoin.

"At the moment, there are no other banking-related

players in that space ... that's definitely the feedback we have

from the market, both corporates, financial institutions, but

also crypto exchanges," he said. "There is a very, very strong

need for well-regulated, robust offering in the crypto and

stablecoin space".

SG-FORGE said that its token can be used for crypto trading,

cross-border payments, foreign exchange transactions and

management of collateral and cash, and will be listed on various

crypto exchanges, without giving further details.

The subsidiary has "more than 15" crypto exchanges and

brokers being onboarded as clients, Stenger added.

In the U.S., Congress is

poised

to pass legislation to create a regulatory framework for

stablecoins. Bank of America ( BAC ) could launch a stablecoin, its CEO

said earlier this year, and some other large banks are

considering

issuing a joint stablecoin.

Tether is the world's largest stablecoin issuer. Its CEO

said in a post on X that the company was the seventh biggest

buyer of U.S. government debt in 2024, because it holds its

dollar reserves in Treasuries.

The second-largest issuer, Circle, went public on the

U.S. stock market on June 5 and saw its

shares

soar 48% on Friday.

Regulators have long warned that stablecoins could

impact

market stability

by creating connections between mainstream finance and more

volatile crypto markets.

($1 = 0.8778 euros)