According to Binance CEO Changpeng “CZ” Zhao, it is quite possible that stablecoins that are not linked to the dollar will increase in popularity. Examples include stablecoins linked to the euro, the Japanese yen and the Singapore dollar. His claim comes in the wake of the attack by US regulators on Binance’S BUSD.
Stablecoins linked to other currencies
This week, Binance’s stablecoin, BUSD, has come under fire. BUSD’s publisher, Paxos, has been indicted by the Security and Exchange Commission (SEC). According to the SEC, BUSD is an unregistered security. Paxos has stopped issuing new BUSD for the time being.
The CEO of Binance speaks out on the topic in a Twitter Spaces discussion. He was asked about stablecoins linked to gold and CZ believes this is definitely an option. But stablecoins linked to fiat will remain necessary. The reason for this, according to him, is because the costs of most crypto users are in fiat currency.
It appears that the SEC is targeting dollar-linked stablecoins. CZ believes that the crypto market will therefore focus more on stablecoins that are linked to other currencies.
“I think the current setting of regulators against dollar stablecoins will lead to the crypto industry focusing more on non-dollar stablecoins. We will probably see more stablecoins linked to the euro, the yen and the Singapore dollar. It made us consider several options.”
Stablecoins need to be more transparent
CZ also said that algorithmic stablecoins could play a bigger role, but for now, algorithmic stablecoins are a lot riskier than stablecoins backed by fiat. According to CZ, these risks should be made clear to users, and stablecoin issuers should show more transparency. In this way, users can make an informed choice.
BUSD, the native stablecoin of CZ’s Binance, is therefore in a precarious situation. BUSD’s publisher, Paxos, has said it disagrees with the SEC’s allegations and should it be necessary to litigate harshly in a lawsuit.