Binance has turned to a new set of stablecoins in the wake of the United States Securities and Exchange Commission (SEC) regulatory action against its native stablecoin, Binance USD (BUSD). The SEC had sent a notice to Wells, alleging that BUSD violates US securities law.
Upon notification from the SEC, the New York Department of Financial Services (NYDFS) asked the issuer of BUSD, Paxos Trust, to stop minting new BUSD. The ban on minting BUSD has forced Binance to look for alternative methods to meet its stablecoin needs.
According to on-chain data, The largest cryptocurrency exchange by trading volume is trying to incorporate TrueUSD (TUSD) and add support for some decentralized stablecoins. The cryptocurrency exchange minted 180 million TUSD from February 16-24.
1/ With the SEC’s regulation of $BUSD, #Binance is looking to collaborate with other stablecoin projects.
– Minted 180M $TUSD from Feb 16 to Feb 24;
-Announced listing $LQTY in the Innovation Zone on Feb 28;
– Announced launching $TRU perpetual contract today.To thread pic.twitter.com/YqCDWkd3hE
— Lookonchain (@lookonchain) March 6, 2023
1/ With the SEC regulation of $BUSD, #Binance seeks to collaborate with other stablecoin projects.
– Minted 180M $TUSD from February 16 to 24;
– The inclusion of $LQTY in the Innovation Zone was announced on February 28;
– Announced the launch of the $TRU perpetual contract today.
TrustToken, the operator behind the US dollar-indexed stablecoin TUSD, has been a Binance partner since June 2019. The partnership allowed Binance to purchase TUSD for zero fees and exchange it for fiat currencies. Binance’s relationship with TUSD has come full circle. In September 2022, Binance self-settled TUSD to BUSD to increase its market share. Now with the BUSD ban, Binance is minting more and more new TUSD to mitigate their stablecoin needs.
Binance CEO Changpeng Zhao has said that the cryptocurrency exchange will look at other options to diversify its stablecoin away from BUSD after the regulatory actions. Just a couple of weeks later, Binance announced support for the Liquity (LQTY) decentralized lending protocol and launched TrueFi (TRU) perpetual contracts. TRU is the native token of the TrueFi decentralized financial protocol for unsecured lending.
The Binance listing of Liquity and TrueFi has been a huge boost to their price, as both tokens are up 200% in the last month. Cointelegraph reached out to Binance about its interest in decentralized stablecoins, but did not hear back before publication.
Decentralized stablecoins became popular with the advent of Terra’s native stablecoin, TerraUSD (UST). Market experts believed that decentralized stablecoins would be the next big thing in the cryptocurrency ecosystem.. However, with the collapse of the Terra ecosystem in May 2022, views on the nascent stablecoin concept changed rapidly.
The Office of the Comptroller of the Currency used the divestment and collapse of algorithmic stablecoin UST as an example of stablecoin “run risk,” and asset-backed stablecoins also saw minor decouplings as a result.
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