Lugh Stops Issuing Stablecoins in Anticipation of New EU Regulations
Euro-pegged stablecoin issuer Lugh has suspended the issuance of its EURL tokens in preparation for the implementation of the EU’s Markets in Crypto-Assets Regulation (MiCA). This new regulatory framework aims to enhance consumer protection and ensure market stability by imposing strict requirements on stablecoin issuers.
Lugh officially announced the suspension through updates on its website and social media platforms, reaffirming its commitment to regulatory compliance.
Under the MiCA regulations, which will be fully enforced by December 2024, stablecoin issuers are required to maintain adequate capital reserves and establish robust procedures for handling complaints. They must also implement thorough risk management practices and comply with detailed oversight of their operational standards and financial reserves.
Lugh’s decision to halt EURL token issuance ahead of the MiCA regulations demonstrates the company’s proactive approach to adjusting its operations to comply with the new regulatory environment. The company has assured token holders that existing EURL tokens can be redeemed until August 30, 2024, with funds stored in a reserve account at Société Générale and subject to monthly audits by Deloitte to ensure transparency and financial integrity.
Furthermore, Lugh’s announcement comes shortly after Binance hinted at impending restrictions on unregulated stablecoins within the EU. While Binance did not specifically mention major stablecoins like USDT and USDC, the implication has raised concerns about limited access for European users under the new regulatory regime.
Lugh’s decision to suspend token issuance reflects the changing landscape of cryptocurrency regulations in the European Union, signaling a broader industry trend towards increased compliance and security in crypto financial transactions.
Also Read: Stablecoins Surpass $846 Billion in On-Chain Trading Volume
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