Amid regulatory challenges faced by Nevada-based Prime Trust, TrueUSD, a leading stablecoin project, assured stakeholders on June 22 that it had no financial exposure to the troubled trust company. Prime Trust, a crucial player in the crypto ecosystem, was compelled to halt all fiat and cryptocurrency transactions following an order from state regulators, leaving many clients with inaccessible funds.
Prime Trust, an integral player in the cryptocurrency ecosystem offering a variety of services, including digital asset custody and transaction technology solutions, had suddenly ceased all fiat and cryptocurrency deposits and withdrawals on the same day. This move came in response to an order from state financial regulators and left many clients in a precarious situation with their funds effectively stranded.
TrueUSD emphasized in the announcement that it had previously diversified its partnerships and was thus insulated from the disruption at Prime Trust. The company underscored that it maintained multiple channels for handling U.S. dollars and no longer relied on Prime Trust for the minting or redemption of its TUSD stablecoin.
The wider cryptocurrency market responded to these developments with market volatility. TUSD, which is a stable asset, experienced fluctuations in its value between $0.995 and $1.003 since Prime Trust’s financial crisis began to intensify on June 9.
This volatility also affected loan markets for TUSD, particularly at Aave v-2, the largest on-chain lending facility for TUSD. The variable borrow rate for TUSD shot up above 30% APR, with some instances even higher. Nevertheless, certain traders were undeterred by these high rates and continued placing bets on a significant de-pegging of TUSD.
Earlier on June 10, TrueUSD had witnessed a minor deviation from its dollar peg due to a temporary halt in minting activities facilitated by Prime Trust. TrueUSD responded to the situation by reassuring its users that while the minting process through Prime Trust was temporarily paused, its other banking partnerships for TUSD minting and redemption services were unaffected.
At the time of the announcement, TUSD was trading at its pegged value of $1, with an estimated market cap of $3.1 billion.
