On June 14, Iceland officially joined the Blockchain revolution. A news report stated that the country’s sole financial regulator finally approves the operation of a Blockchain-powered electronic money firm. It is the first ever in the country.
Reykjavik-based Monerium had received the approval from the Financial Supervisory Authority of Iceland. With the support of ConsenSys, a Blockchain software company, Monerium will provide fiat payment services that involve the use or ETH.
Iceland had long been using the e-money system. However, Monerium will pioneer in using the electronic money payment system over a Blockchain. CEO and co-founder of Monerium, Sveinn Valfells, explained to a local crypto media outlet that an established European regulatory framework would govern their operations. Valfells even added that the people, as well as the institutions, will soon see that the fiat currency is the most practical option to use. However, he also warned that interested user must comply with the existing regulations.
The other co-founder, Jon H. Egilsson announced that he would attend a digital currency conference on Saturday. It will be held in Stockholm, and he confirmed that he would further discuss the news. Previously, Egilsson served as the Supervisory Board Chairman of the Icelandic Central Bank.
With the help of ConsenSys, Monerium will begin their operations using the etherium Blockchain. The e-money is fiat held, and they can be transferred digitally. Moreover, transfers and other expenditures can be done even without an intermediary. Egilsson also said that the Blockchain-powered E-money payment systems would operate across public and private distributed ledgers.
Egilsson also said that the company’s e-money system incorporates the same benefits provided by programmable money on the Blockchain industry. Furthermore, it is the closest form of central bank money available as per the standard of the EU regulatory framework.
The financial crisis in the past had given birth to the establishment of an electronic money institution. The European Union made the concept legal in a 2009 act. Today, the rule still governs the operations of prepaid debit cards.
How the Blockchain-Powered E-Money System Works
Banking institutions make money by making the customers’ deposits loanable to qualified borrowers. Egilsson explained that EMIs use the deposits more conservatively. Instead of using the clients’ money for lending purposes, the funds are being put in a separated portfolio of high-quality liquid instruments. These portfolios also come with minimum regulatory reserves. Moreover, the EMI system also provides users with additional protection. Fiat currencies that were put into an EMI can be redeemed without further conditions.
Cross-border payments can also be done even without a financial intermediary as long as the e-money is put on the Blockchain. Monerium plans to launch its pilot operation with Icelandic krona. At the moment, the company’s version of ISK will be accepted throughout the EU. However, Monerium is making efforts to make it usable in other parts of the world. They also promised that more currencies would follow.