MiCA-Compliant Stablecoin for Cardano by TokenLink

[GENERAL] Name and surname of main applicant

Zug Software Solutions

[GENERAL] Are you delivering this project as an individual or as an entity (whether formally incorporated or not)

Entity (Incorporated)

[GENERAL] Please specify how many months you expect your project to last (from 2-12 months)

4

[GENERAL] Please indicate if your proposal has been auto-translated into English from another language

No

[GENERAL] Summarize your solution to the problem (200-character limit including spaces)

We will analyze the legal framework, required licenses, and outline the tools needed on Cardano to enable the creation of a MiCA-compliant EUR stablecoin, paving the way for regulated DeFi

[GENERAL] Does your project have any dependencies on other organizations, technical or otherwise?

No

[GENERAL] If YES, please describe what the dependency is and why you believe it is essential for your project’s delivery. If NO, please write “No dependencies.”

No dependencies.

[GENERAL] Will your project’s output/s be fully open source?

Yes

[GENERAL] Please provide here more information on the open source status of your project outputs

Yes we will release all findings

[METADATA] Horizons

Stablecoin

[SOLUTION] Please describe your proposed solution

We aim to explore the MiCA (Markets in Crypto-Assets) regulatory framework and understand the legal and technical requirements for issuing a compliant EUR stablecoin on Cardano. The MiCA framework provides clear guidelines for stablecoin issuance, but there are still uncertainties around how these regulations will apply specifically to Cardano's ecosystem and what tools need to be built to allow MiCA compliant stablecoins. 

Our approach is to conduct thorough research into the legal landscape, licenses, and the necessary technical adjustments or tools required on Cardano to ensure full compliance with MiCA. We aim to engage with multiple legal experts,  regulatory advisors, and assess gaps in the current Cardano infrastructure. By uncovering these legal and technical requirements, we will establish a clear roadmap for building a MiCA-compliant EUR stablecoin, ultimately benefiting Cardano by attracting institutional users and improving liquidity.

This work is crucial for Cardano’s growth in the European market, as it paves the way for regulated financial products on the blockchain, which will expand Cardano’s use cases in a secure and compliant manner. Demonstrating compliance with MiCA will also enhance trust in the ecosystem, positioning Cardano as a leader in compliant decentralized blockchain finance.

[IMPACT] Please define the positive impact your project will have on the wider Cardano community

Our project will have a significant positive impact on the Cardano community by laying the groundwork for the development of a MiCA-compliant EUR stablecoin, which would be one of the first compliant stablecoins in the blockchain space. This effort will attract institutional players and traditional financial entities, bringing new levels of legitimacy and trust to Cardano’s DeFi ecosystem. The research and findings will unlock future opportunities, increasing adoption and enhancing Cardano's presence in the European market.

We are aiming to share the output through various sources including writing multiple documents outlining our research results. These reports include information on the legal framework, required licenses, and the necessary technical tools and adjustments for a MiCA-compliant stablecoin. Moreover, the successful completion of this research could serve as a foundation for a follow-up proposal aimed at issuing the EUR stablecoin on the Cardano blockchain while better estimating the amount of adjustments and licenses necessary to make the stablecoin possible. 

[CAPABILITY & FEASIBILITY] What is your capability to deliver your project with high levels of trust and accountability? How do you intend to validate if your approach is feasible?

We are a team with a strong combination of expertise in the Cardano blockchain and knowledge of the MiCa legal framework and regulatory compliance, which positions us to successfully deliver the project. Moreover, we have multiple contacts into the legal field that have extensive knowledge of regulatory compliance in the fintech space. We are planning to engage these contacts as part of our proposal. We are planning to take the following steps to ensure feasibility. We will conduct an in-depth analysis of the MiCA framework, consulting legal experts and regulatory bodies to understand the specific requirements for issuing a EUR stablecoin. Moreover, we will analyze Cardano’s existing infrastructure to identify the necessary technical tools and adjustments that will ensure compliance with MiCA regulations. We plan to divide the project into clear milestones and deliverables, with regular reporting to ensure transparency and accountability. We are confident in our ability to deliver this project with high levels of trust and accountability.

[PROJECT MILESTONES] What are the key milestones you need to achieve in order to complete your project successfully?

Milestone Outputs:

Initial report outlining the MiCA regulatory framework and specific legal requirements for issuing a MiCA-compliant EUR stablecoin.

Acceptance Criteria:

Completion of a legal analysis identifying the licenses needed, compliance requirements, and potential regulatory challenges. (Can’t be seen as a full legal analysis and will contain a disclaimer about not being legal advice) 

Evidence of Milestone Completion:

A publicly available report summarizing our key finding

Milestone Outputs:

Report detailing the technical tools, protocols, and infrastructure adjustments required for Cardano to support a MiCA-compliant EUR stablecoin.

Acceptance Criteria:

A comprehensive document identifying technical gaps in Cardano’s infrastructure and proposing specific solutions or tools needed to meet MiCA compliance.

Evidence of Milestone Completion:

A published technical report available to the Cardano community 

Milestone Outputs:

A detailed report outlining the steps needed for preparing and applying for the necessary licenses and documents needed to issue a MiCA-compliant stablecoin.

Acceptance Criteria:

A complete roadmap describing the licensing process, timeline, and resources required for a compliant stablecoin issuance.

Evidence of Milestone Completion:

A final draft of the report to outline a complete roadmap for a future project (including a timeline and cost estimate)

Milestone Outputs:

Final report consolidating all legal, technical, and licensing insights, providing a clear, actionable roadmap for the next steps in issuing a EUR stablecoin.

Acceptance Criteria:

A completed report offering a strategic plan for the next project phase, including actionable recommendations for license acquisition and technical development on Cardano.

Evidence of Milestone Completion:

A publicly distributed final report, shared summarizing all research findings and outlining the next steps to obtain an EUR stablecoin on Cardano 

[RESOURCES] Who is in the project team and what are their roles?

Lead Project Manager: Oversees the entire project, coordinates between legal, technical, and development teams, manages timelines, milestones, and ensures all deliverables are met. The project manager has sufficient basic knowledge of the MiCA framework and regulatory requirements and will manage the collaboration with external legal experts. The role requires skills in project management, financial planning, and a foundational understanding of legal frameworks.

Blockchain Developer (Cardano): Leads the technical analysis of Cardano’s infrastructure, identifies gaps, and recommends the necessary tools and adjustments for MiCA compliance. The developer specializes in Cardano development, smart contracts, and technical architecture.

Research Analyst: Supports both the legal and technical teams by gathering and organizing data, analyzing market trends, and assisting in report development. This role requires research, data analysis, and knowledge of regulatory frameworks.

External Partnership: We plan to collaborate with an external law firm specializing in DeFi regulations and MiCA compliance. This firm will provide detailed legal guidance on the regulatory landscape and help identify the required licenses for issuing a compliant EUR stablecoin on Cardano.

[BUDGET & COSTS] Please provide a cost breakdown of the proposed work and resources

The total budget for this project is 94,000 ADA, allocated to ensure comprehensive coverage of all necessary activities for successful completion.

We have allocated 40,000 ADA for legal and regulatory analysis. This covers the engagement of an external law firm specializing in DeFi regulations and MiCA compliance, which will provide detailed legal guidance, identify required licenses, and assist in understanding the regulatory landscape for issuing a compliant EUR stablecoin on Cardano.

For the technical feasibility assessment, we have allocated 25,000 ADA. This budget will cover the blockchain developer's work in analyzing Cardano's infrastructure, identifying necessary technical tools, and proposing adjustments to achieve MiCA compliance. It includes any software resources or tools required for the technical analysis.

Project management and coordination are critical for timely and effective execution. We have allocated 15,000 ADA for the project manager's efforts in overseeing the project, coordinating between the legal and technical teams, managing timelines, and ensuring all deliverables are met according to plan.

The research analyst's activities are allocated 8,000 ADA. This covers data gathering, market analysis, and assisting in the development of detailed reports for each milestone. It ensures that our findings are well-documented and accessible to the Cardano community.

The remaining 6,000 ADA is reserved for miscellaneous expenses. This includes administrative costs, contingency funds for unforeseen expenses, and minor costs related to the dissemination of reports and findings to the community, such as publishing fees or hosting online materials.

This detailed budget aligns with our project plan and milestones, ensuring that each element is properly funded. It reflects our commitment to responsible fund management and delivering valuable outputs that will benefit the Cardano ecosystem.

[VALUE FOR MONEY] How does the cost of the project represent value for money for the Cardano ecosystem?

The cost of this project represents excellent value for the Cardano ecosystem as it focuses on foundational research to unlock the potential for a MiCA-compliant EUR stablecoin, which would drive regulated DeFi adoption and attract institutional users. We have carefully estimated costs based on competitive rates for legal, regulatory, and technical expertise, aligning with industry standards and ensuring we attract top talent. By addressing legal and technical barriers upfront, this project minimizes long-term risks and paves the way for future projects, delivering long-term value with a relatively small initial investment. This proposal also allows in a next-step to issue the stablecoin while having a good overview of the exact amount of resources and legal challenges required and hence this initial feasibility study is the first logical step for the ecosystem.