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Innovative stablecoin launches with unique regulatory strategy

TL;DR

  • Mehen Finance is launching a stablecoin on Cardano with features to prevent over-issuance and regulatory compliance.
  • USDM stablecoin, unlike others, cannot be frozen but might face regulatory challenges.
  • The company plans to expand its reach globally through regulated crowdfunding for investment.

Mehen Finance, the entity behind the USDM stablecoin on Cardano‘s blockchain, is gearing up for a public retail rollout slated for April. The stablecoin officially debuted on Cardano’s network on March 17 and is currently accessible solely to institutional users. Matthew Plomin, founding partner of Mehen Finance, disclosed plans for the forthcoming retail rollout during a recent interview with Cointelegraph.

Unique features and regulatory implications

USDM, much like other fiat-backed stablecoins, is designed to maintain a 1:1 peg with the US dollar. However, it boasts a distinctive feature aimed at preventing over-issuance. The stablecoin’s reserve is directly reported to Charli3, a decentralized oracle tailored to the Cardano ecosystem. This integration ensures transparent real-time transfers and eliminates the possibility of excess minting.

In addition to its technical attributes, USDM is touted as an unfreeze stablecoin, a notable departure from counterparts like USDC and USDT. While some laud this characteristic as a significant advantage, others caution that it could attract regulatory scrutiny. Vanessa Harris, a prominent crypto commentator, has expressed concerns that regulators might resort to freezing USDM-linked bank accounts, potentially jeopardizing its peg to the US dollar.

Regulatory compliance and institutional adoption

Mehen Finance, headquartered in New York, has proactively pursued licensing approvals from regulatory bodies across the United States. The company has secured regulatory clearance from 17 states, with plans for additional approvals in the pipeline. Furthermore, Mehen intends to obtain money transmitter and virtual asset service provider licenses in Europe and the United Kingdom later this year, underlining its commitment to regulatory compliance and global expansion.

USDM’s reserve is held in government-only money market mutual funds at reputable financial institutions such as Fidelity and Western Asset Management to bolster confidence in its stability and security. Plomin emphasizes that these funds are not utilized as banks, underscoring Mehen’s adherence to stringent regulatory standards.

Innovative investment strategy

Mehen Finance is set to embark on its maiden investment round through a crowdfunded equity raise, a departure from conventional fundraising methods in the crypto space. Using regulated crowdfunding signifies Mehen’s commitment to transparency and regulatory compliance. Plomin disclosed plans to tokenize the company’s Series A shares on the Cardano blockchain, enabling global accessibility to investors.

The investment raised will be facilitated through ChainRaise, a crowdfunding platform, offering individuals worldwide an opportunity to participate in Mehen’s growth trajectory. By embracing this innovative approach, Mehen aims to democratize access to investment opportunities while fostering community engagement and support.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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James Kinoti

A crypto enthusiast, James finds pleasure in sharing knowledge on fintech, cryptocurrency as well as blockchain and frontier technologies. The latest innovations in the crypto industry, crypto gaming, AI, blockchain technology, and other technologies are his preoccupation. His mission: be on track with transformative applications in various industries.

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