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EMT


E-Money Token

An electronic money token/ e-money token (EMT) is a cryptographic token used as a medium of exchange and is pegged to a single fiat currency. As such, it bears similarity to an asset-referenced token (ART), but it is only pegged to a single fiat currency, e.g., Tether or USDC. EMTs are to be backed by tangible/ real world assets (RWAs). For example, if an entity issues USD 100,000 of a dollar-pegged EMT, the issue is, or has to be, backed by assets worth USD 100,000 (or assets denominated in dollar) whether kept in a bank account or a similar arrangement. Unlike electronic money, EMTs operate on a distributed ledger (DL), distributed ledger technology (DLT). However, similar to electronic money, it maintains a one-to-one equivalence with the underlying currency.

E-money, per se, is a digital representation of money held in an account or a similar vehicle, and when the e-money is tokenized using a distributed ledger (blockchain), it is known as an e-money token (EMT). E-money tokens function primarily like money- i.e.,  these tokens are used for making payments- but unlike cryptocurrencies and stablecoins, the  tokens not tradable on an exchange. As a type of cryptoasset, EMTs purport to maintain a level of stability in value by pegging it to one official currency (as a single underlying backing). Hence, these tokens are perceived to be a category of stablecoins (in addition to asset-referenced tokens and other types of utility tokens). In terms of broader category, these tokens are classified within virtual assets (blockchain virtual assets).

Issuance and use of EMTs are subject to certain restrictions under certain conditions. For example, tokens that reference EU currencies have no limits on usage. EMTs referenced to non-EU currencies are subject to a ceiling of EUR 1 million (as at the time of writing).



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