Changpeng Zhao returned to the concerns surrounding the BUSD, giving some insight into the future of stablecoin, mentioning the possibility of new solutions that would not rely on the dollar.
CZ speaks out on stablecoin BUSD
Amidst the turmoil surrounding the Paxos-issued BUSD stablecoin, Changpeng Zhao (CZ), the CEO of Binance, posted a Twitter thread aimed at reassuring the community and gave some thoughts on what to expect next:
BUSD A thread. 1/8
In summary, BUSD is issued and redeemed by Paxos. And funds are SAFU!
– CZ Binance (@cz_binance) February 13, 2023
Firstly, he reaffirms what was announced yesterday: the capitalisation of the BUSD is bound to decrease now that Paxos is no longer allowed to issue it. CZ also insists that the stablecoin continues to be guaranteed by the issuing company, and that all BUSDs can be redeemed.
Furthermore, Binance will continue to support the BUSD “for the foreseeable future”, and its CEO believes that the platform’s users will gradually switch to other stablecoins. As a result, he argues that BUSD-denominated trading pairs could be on their way out.
But while Binance’s plans for its stablecoin are still unclear, Changpeng Zhao gave an interesting thought. Indeed, when asked by a user why the platform isn’t looking for an alternative issuer to Paxos, CZ replied that his company was exploring “non-USD based stablecoins”:
We are exploring others, and non-USD based stablecoins.
– CZ Binance (@cz_binance) February 13, 2023
Among these possibilities, we think of a stablecoin indexed to the euro. Indeed, Circle has shown that this is possible with the EUROC, although it only has a capitalization of $33.6 million. But we’ll have to wait and see what Binance is really up to.
What’s the SEC playing at?
In the space of a few days, the Securities and Exchange Commission (SEC) has been particularly aggressive against the cryptocurrency ecosystem, so much so that it questions its objectives.
Indeed, CZ has rightly pointed out that if the BUSD is indeed recognised as a security in a court of law, it would have “profound implications” for the industry. And for good reason, the BUSD is, in effect, not that different from the USDT and USDC in its operation, with collateralisation in Treasury bills.
However, while this is not a conspiracy theory, the fact that this stablecoin with such a large capitalization is issued on behalf of a non-US company may raise questions, although this is also the case with Tether. It will therefore be important to monitor the SEC’s potential future actions against other stablecoins in the market.
It is worth noting that the ecosystem is regularly troubled by periods of regulatory uncertainty and that it has always come out stronger until now. While this time the uncertainty is coming from the US, it could benefit other parts of the world who could seize the opportunity to get ahead of the game.
