E-Money Token/ Stablecoin

E-money tokens (EMTs) and stablecoins are both types of digital assets designed to maintain a stable value, typically pegged to a fiat currency like the euro or US dollar. E-money tokens are defined under the EU's proposed Markets in Crypto-Assets Regulation (MiCA) and represent a digital form of fiat currency issued by an entity, aiming to facilitate electronic payments. They are regulated to ensure consumer protection and market stability.

Overview

Services Provided

Issuing stablecoins
Facilitating cross-border digital payments
Offering secure and stable digital assets for consumer and business transactions

Capital Requirements

Issuers of E-Money Tokens are required to hold a significant amount of reserve capital to ensure the stable value of the tokens, protecting against liquidity risks and ensuring financial stability.

Transaction Limitations

MiCA imposes limits on the issuance and circulation of stablecoins to prevent over-reliance on a single issuer and to maintain market stability. Transactions involving stablecoins must adhere to strict transparency and reporting requirements.

Safeguarding Requirements

Issuers must ensure that the assets backing the stablecoins are stored securely and are fully redeemable by consumers at any time. These assets must be held in a secure and protected manner to safeguard consumer funds.

Jurisdictional Limitations

E-Money Tokens can be issued and circulated across the EU with MiCA authorisation, but any operations outside the EU must comply with local regulations.

Legal & Regulatory Framework

MiCA Regulation
The Data Protection Act 2018 and EU General Data Protection Regulation (GDPR)
MiFID II

Key Restrictions

Restricted from issuing stablecoins without sufficient backing or reserves.
Subject to strict reporting requirements to ensure transparency in the issuance and circulation of stablecoins.

Regulatory Updates

Deep dive into E-Money Token/ Stablecoin

Introduction

Explore the opportunities of issuing and managing E-Money Tokens (Stablecoins) under MiCA, the EU's regulatory framework for crypto-assets. Stablecoins are digital assets designed to maintain a stable value, offering businesses a compliant and secure way to offer digital payments and transfers. MiCA ensures these tokens meet strict regulatory standards to protect consumers and promote market stability.

Definition

MiCA is a comprehensive regulatory framework designed to govern the issuance, trading, and custody of crypto-assets within the European Union. This regulation aims to protect investors and ensure financial stability by overseeing crypto firms, digital wallets, and exchanges. MiCA is critical for businesses operating in the crypto space and seeking compliance with EU standards.

Additional Information (Services)

Issuing stablecoins: Enables firms to create stable digital assets pegged to a fiat currency while complying with MiCA’s stringent requirements.
Cross-border payments: Facilitates secure and efficient payments across borders using stablecoins.
Stable digital assets: Provides a reliable digital currency for consumer and business use, minimising volatility.

Additional Information (Legal & Regulatory Framework)

MiCA: Governs the issuance and use of stablecoins within the EU.
GDPR: Ensures that consumer data related to stablecoin transactions is protected.
MiFID II: Influences MiCA in establishing transparency and investor protection principles for digital assets like stablecoins.

Additional Information (Key Restrictions)

Stablecoin issuers are restricted from issuing tokens without adequate reserves or from engaging in speculative activities. They must ensure full transparency in their operations, with clear mechanisms for redeeming the tokens for fiat currency.