Overview of Schuman Financial

We are excited to announce our leading investment in Schuman Financial, a fiat-backed stablecoin issuer focused on the European market. This €7 million fundraising effort is supported by an experienced team, including former Binance executives, positioning Schuman to significantly impact the euro-denominated financial landscape with its fully MiCA-compliant stablecoin, EURØP.

Schuman’s public launch comes at a crucial time when the stablecoin market is predominantly USD-denominated. Currently representing over 99.5% of the $180 billion in circulating stablecoins, USD stablecoins overshadow euro-denominated options, which account for less than 0.3%. Schuman aims to bridge this gap and capitalize on recent favorable developments in the European regulatory environment.

Industry Overview in Europe

The euro, while constituting around 21% of global foreign exchange reserves in traditional finance, has not translated its significance into the crypto market. This discrepancy can largely be attributed to three key factors: lack of demand, limited incentives for issuers, and historical regulatory hurdles.

Lack of Demand: The dominance of USD stablecoins in the DeFi ecosystem stems from their first-mover advantage and widespread acceptance, making them the go-to option for traders. This trend has hampered the growth and adoption of euro stablecoins, given that traders often convert their local currencies to USD to engage in crypto trading.

Limited Incentives for Issuers: Until recently, low or negative interest rates in Europe made issuing euro-backed stablecoins less appealing for issuers, as the returns on reserves were minimal. As a result, issuers concentrated efforts on USD stablecoins where revenue potential was higher, limiting the development of euro alternatives.

Regulatory Hurdles: A lack of clear regulatory guidelines in Europe has also stunted the growth of euro stablecoins, leading to a cautious approach from potential issuers. However, the situation is evolving.

Rationale Behind the Deal

The landscape for euro stablecoins is changing, propelled by factors such as the introduction of the Markets in Crypto-Assets (MiCA) regulation, rising interest rates, and increasing demand from European traders for local currency trading. MiCA aims to enhance regulatory clarity, thereby building trust and promoting wider adoption of stablecoins across Europe.

With interest rates moving away from the zero and negative environment, euro stablecoin issuers are now better positioned for profitability. Additionally, European traders are increasingly seeking ways to minimize their exposure to USD-denominated assets, creating a conducive environment for stablecoins like EURØP.

Investor Profile

Schuman Financial boasts an impressive team well-versed in both traditional finance and decentralized finance. Key figures in the leadership include Martin Bruncko, the former Vice President of Binance Europe, who brings a wealth of experience in European policy and finance, and Nicholas Pouzin, the former Head of Principal Investments at RockawayX, with extensive backgrounds in major financial institutions and investment banking.

The combined expertise of Schuman's team positions the company favorably within the burgeoning euro stablecoin market, as they leverage their regulatory compliance and banking partnerships to provide security and credibility to users.

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From an investment perspective, Schuman Financial represents a timely and promising opportunity. The current market dynamics reveal a significant demand for euro-backed stablecoins, and Schuman is entering the fray at a critical juncture where regulatory frameworks are starting to favor such products.

The unique positioning of Schuman, with its MiCA compliance and established banking relationships, provides a competitive advantage that many of its predecessors lacked. The management team's expertise further strengthens our conviction in their ability to navigate the complex intersection of traditional finance and DeFi successfully.

Moreover, as the industry matures, the sustained interest from both institutional players and retail traders in euro-denominated assets boosts the prospects for EURØP's acceptance and integration within the broader financial ecosystem.

In conclusion, we are confident that Schuman Financial will not only meet the existing market demand but also pave the way for the future of euro-denominated digital assets, making it a compelling investment opportunity.

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