(BlockBar) Reykjavik-based Monerium has been approved by The Financial Supervisory Authority of Iceland (FME) as its first electronic money institution. It means that Monerium now has regulatory approval to provide fiat payment services on a blockchain and also use it throughout the European Economic Area. To be noted, electronic money is a well-established regulatory framework in Europe.
However, it’s the first time that electronic money has been approved over a blockchain. According to the CEO and co-founder of Monerium Sveinn Valfells, “For practical purposes, fiat will be the currency most people and institutions will want to use in the near- and medium-term. And if you are touching fiat in any way, you just have to comply with the relevant regulations.”
Electronic money is fiat held and it is transferred digitally. The ethereum blockchain will be initially used to operate ConsenSys-backed Monerium. It is worth noting that It is prepared to operate across public and private distributed ledgers. It is also allowing expenditures and transfers to be made without an intermediary.
The legal concept of an electronic money institution (EMI) dates back to the financial crisis which was established in 2009 by the European Union. According to Valfells, this rule is primarily used now for prepaid debit cards.
She also argues that many companies making similar products, such as fiat-backed stablecoins, designed technology first and looked for regulators to approve it. Monerium had decided to base its technology on an existing set of rules instead.
It is worth paying attention that the banks make money by turning deposits from customers into loans to borrowers and EMIs are more conservative with deposits. According to Monerium co-founder Jon H. Egilsson, “Unlike bank deposits, an electronic institution (EMI) must safeguard clients funds separately from any other financial activities, such as lending. Instead, customer funds are invested in a segregated portfolio of high-quality liquid instruments along with regulatory minimum reserves. The structure is similar to a high-grade money market fund.”
Just like any other regulated form of payment, Monerium also follows the typical know-your-customer(KYC) feature. To be noted, KYC is an anti-money-laundering procedures familiar throughout the developed world.
John Danie is a highly experienced marketing strategist and businessman in the blockchain industry who likes the pace of the development of cryptocurrency, especially in blockchain technology where it can move so fast. Being a fintech writer and crypto reporter with a fascination for tech and a passion for starting interesting conversations, he seeks to create authentic news stories in the industry.