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Saturday, June 3, 2023
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crypto industry will probably move to non-dollar stablecoins

The crypto industry will “probably” start using euro, yen, or Singapore dollar based stablecoins in the future, reducing its reliance on US dollar based stablecoins, according to a Feb. 14 statement on Twitter Spaces by Binance CEO Changpeng Zhao, also known as “CZ.”

CZ gave the statement in answer to a question about the crypto industry using gold as a standard of value instead of the US Dollar. CZ agreed that it “makes sense” to use gold. However, “most people’s costs are still in fiat currencies.” For this reason, most people calculate their investment returns in dollars, which is why US Dollar backed stablecoins are “still important.”

However, CZ argued that the US government’s recent actions against US dollar stablecoins will probably lead the global crypto industry to rely on other currencies such as the Euro, Yen, and Singapore Dollar to back stablecoins, as he explained:

“I think given the current pressure and current stances taken by the regulators on the US Dollar based stablecoins, I think that as you said the industry will probably move away to non US dollar based stablecoins[…]as a result of this we probably will see more euro based or other Japanese yen, Singapore dollar based stablecoins, so it’s actually prompted us to look for more options in different places.”

Related: SEC Lawsuit against Paxos over BUSD baffles crypto community

CZ said that algorithmic stablecoins may also play a larger role in the crypto ecosystem going forward. However, he cautioned that algorithmic stablecoins are “inherently gonna have risks” that fiat backed stablecoins don’t have. In CZ’s view, these risks need to be disclosed transparently to users, and reserves for fiat backed stablecoins also need to be disclosed. This way, “users can very clearly decide what is going on” and make up their own minds about which stablecoins they want to hold or use.

CZ’s statements came just a day after the SEC accused US dollar based stablecoin Binance USD (BUSD) on of being an unregistered “security” under U.S. laws. The algorithmic stablecoin, TerraUSD (UST) lost its peg to the US dollar in May, causing over $20 billion in losses to investors.