Binance, one of the world’s largest cryptocurrency exchanges, has minted nearly $50 million worth of TrueUSD (TUSD) amidst reports of regulatory scrutiny from U.S. regulators.
The transaction, which took place on February 16, came just days after Binance CEO Chanpeng “CZ” Zhao announced that the exchange would be diversifying its stablecoin holdings away from Binance USD (BUSD).
CZ also noted that the recent regulatory action on U.S. dollar-backed stablecoins may lead to a decline in their dominance and a move towards non-U.S. dollar-based stablecoins. As a result, Binance is now exploring other options, including euro- and Japanese yen-based stablecoins.
Interestingly, CZ revealed that he was never too bullish on the success of the Binance-branded BUSD stablecoin, which was auto-converted from other stablecoins, including TUSD, in September 2021.
I think with the current stances taken by the regulators on the U.S. dollar-based stablecoin, the industry will probably move away to a non-U.S. dollar-based stablecoin, back to algorithmic stablecoins. CZ said
Binance’s move to diversify its stablecoin holdings comes amid increased regulatory scrutiny of the cryptocurrency industry.
In the United States, the SEC and the New York Department of Financial Services have taken action against U.S. dollar-backed stablecoins, citing concerns over their lack of transparency and potential for fraud. As a result, CZ noted that the industry may move away from U.S. dollar-based stablecoins and towards algorithmic stablecoins.
“There’s multiple agencies putting applied pressure there. It is just going to shrink the U.S. dollar-based stablecoin market,” he added.
CZ, announced that they are exploring other options for stablecoins due to regulatory pressure on USD-backed stablecoins. They plan to diversify into euro- and Japanese yen-based stablecoins and provide more support for USD Coin and Tether.
However, they expect BUSD to wind down over time and are not too bullish on its success. In September, Binance auto-converted TUSD, USDC, and USDP to BUSD driving up BUSD’s share in the stablecoin market from 10% to 15% in a few weeks.
