CZ Highlights the Need for Stablecoins Pegged to Other Fiat Currencies in Light of the BUSD Crackdown
February 15, 2023
The CEO of Binance also acknowledged that the regulators’ approach has changed as a result of the two most amplified crashes of 2022.
In a Twitter AMA (Ask Me Anything), the founder and CEO of Binance discussed a variety of current hot topics in the cryptocurrency community, one of which was the BUSD crackdown by US authorities, as was to be expected.
He opined that the competitive pressure from stablecoins pegged to other fiat currencies, as opposed to the dollar, would be advantageous for the entire cryptocurrency ecosystem.
In the last few days, various US regulatory agencies have increased their scrutiny of the cryptocurrency community. It all started with rumors that the SEC would go after staking, which became true a few days later when the securities regulator stopped Krakens staking services.
As worries grew that this crackdown would only worsen and perhaps affect Coinbase, which has a similar platform, the company’s stock started to decline, ending the week with a sharp 22% decline. The value of cryptocurrency assets also decreased.
But that was just the beginning, as the SEC allegedly sent Paxos a Wells notice indicating it might take legal action against Binance USD’s issuer because it purportedly sells unregistered securities with the stablecoin.
The New York Department of Financial Services subsequently ordered Paxos to stop issuing BUSD a few hours later. BUSD is fully issued and custodied by Paxos, according to Binance and CZ in particular, who both commented on the situation.
In a recent AMA, Zhao predicted that the market would eventually require a wider range of stablecoins, including those pegged to other fiat currencies like the Singapore dollar and the Japanese yen. He even went on to say that a stablecoin issuer based in Japan had already gotten in touch with the biggest exchange in the world.
Regarding claims that Circle had alerted the New York Department of Financial Services (NYDFS) about Binance’s inability to keep sufficient token reserves, CZ said he didn’t think the US company would do so because it might also come back to bite it.