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e-Money noted that the European MiCA legislation will likely hinder the scalability of Euro-backed stablecoins while further limiting business opportunities in the sector.
Nearly 15 months after introducing its Euro-pegged stablecoin EURR in the market, stablecoin issuer e-Money has ceased its issuance citing the current market conditions.
In its latest announcement, e-Money stated that they have ceased the issuance with effect from January 9. Furthermore, they would continue to support the issuance of the stablecoin up to March 6. Besides, users can also swap their EURR stablecoins against other digital assets such as OSMO, ATOM, or USD Coin, on the Cosmos decentralized exchange Osmosis.
For amounts greater than 100,000 EURR, e-Money has recommended direct redemption for euros with e-Money A/S. The firm noted: “This requires KYC/AML and you should expect around 5 business days for processing. Please contact [email protected] to redeem using this option”. In its further statement, e-Money noted:
“Deciding to unwind the EEUR issuance was not an easy decision. e-Money was founded in 2017 with a vision to capture significant stablecoin market share and be a reliable and trusted building block for global financial inclusion. Given the current market conditions, that effort has unfortunately reached a stage where it is prudent and responsible to wind it down”.
Dwindling Demand and Crypto Market Challenges
Unlike the glory times of 2020-21, the cryptocurrency market witnessed major turbulence last year. Besides, e-Money further added that the lack of real-world applications for blockchain has led to lower demand for non-USD stablecoins.
They added that the upcoming European MiCA legislation will likely hinder the scalability of Euro-backed stablecoins while further limiting business opportunities in the sector. “European MiCA legislation in its current form favours commercial banks as future issuers of Euro stablecoins, hurting innovation in the European Union. As a result, the e-Money team has decided to unwind the issuance of EEUR,” said e-Money.
As said, the crypto market faced major headwinds during the last year of 2022 with both, centralized and decentralized platforms experiencing difficulties during this time. As a result, the interest in the crypto market has waned significantly. Although there’s no direct effect on e-Money, the stablecoin business relies heavily on integration with traditional finance.
Amid the slowdown in the broader crypto market, the demand for stablecoins has been on the downside.