After the Securities and Exchange Commission of the United States (SEC) took regulatory action against its native stablecoin, BUSD, Binance turned to a new group of stablecoins. BUSD is allegedly in violation of US securities law, according to a Wells notification from the SEC.
The New York Department of Financial Services (NYDFS) asked BUSD issuer Paxos to cease issuing new BUSD after receiving a notice from the SEC. Due to the BUSD minting ban, Binance has been compelled to find alternative ways to reduce its stablecoin requirements.
On-chain data indicates that the biggest cryptocurrency exchange by trading volume is looking to add TrueUSD and support for a few other decentralized stablecoins. Between February 16 and February 24, the bitcoin exchange issued 180 million TUSD.
Since June 2019, TrustToken, the creator of the USD-pegged stablecoin TUSD, has been a collaborator of Binance. Through a partnership, Binance was able to purchase TUSD for nothing and exchange it for real money. Binance’s TUSD relationship has fully circled; previously in September, Binance automatically converted TUSD to BUSD in order to grow its market share. Binance is now producing more TUSD to lessen its dependence on stablecoins as a result of the prohibition on BUSD.
Changpeng Zhao, the CEO of Binance, has stated that after the regulatory actions. The cryptocurrency exchange will consider alternative choices to diversify its stablecoin away from the BUSD. Binance released perpetual TrueFi (TRU) contracts and announced support for the decentralized borrowing protocol Liquity (LQTY). The native token of the decentralized financial platform TrueFi for unsecured lending is TRU.
Liquity and TrueFi’s launching on Binance had a significant impact on their price. Which has increased by 200% in the past month.
Since the launch of TerraUSD, a local stablecoin, decentralized stablecoins have gained popularity. Decentralized stablecoins were predicted by market analysts to be the next big thing in the cryptocurrency world. However, as soon as the Terra ecosystem collapsed in May 2022, opinions about the fledgling stablecoin idea quickly shifted.
The Office of the Comptroller of the Currency (OCC) cited the depeg and collapse of the TerraUSD Classic (USTC) algorithmic stablecoin as an illustration of the “run risk” associated with stablecoins, and how this risk led to smaller depeg events for asset-backed stablecoins as well.