Only days after the New York Department of Financial Services (NYDFS) stopped Paxos from issuing Binance USD (BUSD), the exchange responded with counteractive measures.
According to data from Etherscan, the transaction took place on February 16. The exchange minted 50 million TrueUSD. This development occurred two days after Binance’s CEO announced that the firm would explore other options to diversify its stablecoin holdings outside BUSD.
A Threat To The Dominance Of Dollar-Pegged Stablecoins
Despite Binance minting 50 million TUSD from the TrustToken smart contract, the CEO stated that the recent regulatory action by the regulatory bodies could lead to a decline in dollar-pegged stablecoin dominance. BUSD’s marketcap has slumped significantly since the decree from the regulatory body to stop token creation. Users continued to dump the stablecoin, culminating in a mild 0.5% depth before returning.
“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.” He said.
Also, CZ added that many agencies are mounting similar pressure on the crypto industry, which may cause the dominance of dollar-backed stablecoins to shrink continuously in the long run.
Interestingly, the move from Binance to mint these stablecoins aligns with the intentions of its CEO, who said they would be adopting other options after the BUD came under scrutiny.
CZ stated that his exchange would provide more support for USD Coin (USDC) and Tether (USDT) in the short term. His team is also looking to explore stablecoins pegged to other dominant currencies, such as the Euro and the Japanese Yen.
Will the attack from US regulatory bodies threaten the dominance of dollar-pegged stablecoins in the long run?
