Regulation
Lugh Halts Stablecoin Issuance Ahead of New EU Regulations
Euro-linked stablecoin issuer Lugh has stopped issuing its EURL tokens, in line with the upcoming implementation of the European Markets in Crypto-Assets (MiCA) regulation. This new regulatory environment, aimed at strengthening consumer protection and ensuring market stability, introduces strict requirements for stablecoin issuers.
Lugh confirmed the suspension via updates on its website and social media, emphasizing its continued commitment to regulatory compliance.
Regulatory conformity
THE MiCA Regulation, which will come into full force by December 2024, includes several important changes. These changes require stablecoin issuers to maintain sufficient capital reserves and adhere to rigorous complaint resolution procedures.
Additionally, issuers must implement robust risk management practices and comply with detailed monitoring of their operational standards and the financial health of their reserves.
Lugh’s cessation of EURL token issuance precedes MiCA’s planned enforcement, requiring adjustments in their operational protocols to ensure compliance. The Paris-based entity reassured token holders by confirming the redemption of existing EURLs until August 30, 2024.
According to Lugh, this process is reinforced by a reserve account at Société Générale, with monthly audits conducted by Deloitte, ensuring transparency and financial integrity.
Additionally, the timing of Lugh’s announcement closely follows a Binance statementwhich indicated upcoming restrictions within the EU on unregulated stablecoins.
Although Binance’s update does not explicitly reference major stablecoins such as Tether’s USDT and Circle’s USDC, the implication has raised concerns about access limitations for European users in the new regulatory framework.
Lugh’s withdrawal from the show marks an important moment in the evolving landscape of cryptocurrency regulation in the European Union, reflecting broader industry shifts towards greater compliance and transaction security cryptographic financial services.
Read also: Stablecoins Surpass $846 Billion in On-Chain Transaction Volume