C4C | 1-26-25 AM: EU Investigates Stablecoin

The European Commission is examining the effectiveness of current EU regulations in protecting investors' redemption rights concerning e-money tokens (EMTs), commonly known as stablecoins. This inquiry follows a request from France's banking and insurance regulator, ACPR, to the European Banking Authority (EBA) to assess whether both EU and non-EU licensed entities can issue identical and fully fungible EMTs. 

Under the Markets in Crypto-Assets Regulation (MiCAR), EMT issuers are required to obtain supervisory clearance and maintain sufficient reserves to ensure repayment capabilities to investors. The investigation also considers whether only EU customers could redeem EMTs from EU-based entities, highlighting differences in regulatory approaches compared to the United States, where President Trump seeks to lessen the regulatory load on crypto companies.

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The term "stablecoin" refers to cryptocurrencies designed to maintain a stable value by pegging them to a reserve of assets, such as fiat currency or commodities, to reduce volatility.