The crypto industry will “probably” start using stablecoins based on euros, yen or Singapore dollars in the future, reducing its reliance on US dollar-based stablecoins, according to a Feb. 14 statement on Twitter Spaces from Binance CEO Changpeng Zhao, also known as “CZ.”
Zhao made the statement in response to a question about the cryptocurrency industry using gold as the standard of value instead of the US dollar. CZ agreed that it “makes sense” to use gold. However, “most people’s costs are still in current money.” For this reason, most people calculate the return on their investments in dollars, which is why US dollar-backed stablecoins “remain important.”
However, Zhao argued that the recent US government actions against US dollar stablecoins will likely lead the global cryptocurrency industry to rely on other currencies such as the euro, yen and Singapore dollar to support stablecoins, as he explained:
“I think given the current pressure and the current stances taken by regulators on USD-based stablecoins, I think as you’ve said, the industry will probably move away from non-USD-based stablecoins. […] As a result of this, we’ll probably see more stablecoins based on Euros or other Japanese Yen, stablecoins based on Singapore dollars, so it’s actually prompted us to look at more options in different places.”
The executive said that algorithmic stablecoins may also play a bigger role in the crypto ecosystem in the future. However, he cautioned that algorithmic stablecoins are “inherently going to have risks” that fiat-backed stablecoins do not. In Zhao’s view, these risks should be transparently disclosed to users, and the reserves of currency-backed stablecoins should also be disclosed. In this way, “users can decide very clearly what is going on” and decide for themselves which stablecoins they want to own or use.
The Binance CEO’s remarks come just one day after the SEC accused the stablecoin Binance USD (BUSD) of being an unregistered “security” under US law. The algorithmic stablecoin TerraUSD (UST) lost its peg to the US dollar in May, causing more than $20 billion in losses for investors.
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