By
Godfrey Benjamin
May 13th, 2024
Binance CEO Changpeng Zhao has stated that BUSD’s regulatory issues might trigger an exodus to non-dollar stablecoins like the euro and yen.
Binance CEO Changpeng Zhao recently said that the crypto industry might resort to non-dollar stablecoins following the ongoing BUSD drama. According to Zhao, the crypto ecosystem could start using stablecoins pegged to the euro, Singapore dollar, or yen. This would reduce reliance on U.S. dollar-based tokens.
Speaking at a Twitter Spaces event yesterday, Zhao said:
“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.”
The Binance CEO also touched on the crypto industry deploying gold as a standard of value instead of the US greenback. Although he admitted that using gold “makes sense,” Zhao explained that “most people’s costs are still in fiat currencies.” As a result, since most investment returns are based on dollars, US dollar-backed stablecoins are essential.
The Binance CEO opined that algorithmic stablecoins could also play a more significant role, alongside non-dollar stablecoins, in the future. However, Zhao also cautioned that these US dollar-pegged stablecoins would inherently pose risks that fiat-backed stablecoins do not have. Consequently, Zhao believes that users need to be abreast of these risks so that they “can very clearly decide what is going on” regarding stablecoin usage.
Binance CEO ‘Non-Dollar Stablecoins’ Statement Follows Recent SEC Criticism of BUSD
Zhao’s statements come on the heels of the Securities and Exchange Commission’s (SEC) legal tussle with blockchain company Paxos. According to the US regulator, Paxos violated investor protection rights by issuing unregistered securities in BUSD. The SEC issued the stablecoin issuer a Wells Notice of its intent to sue, and implored Paxos to stop further BUSD issuances.
Although Paxos was yet to respond to the SEC’s allegations, a Binance spokesperson attempted to clear the air at the time. According to this spokesperson, Binance licenses its brand to Paxos, which owns and issues the product. Furthermore, the Binance representative added that Paxos is under regulation by the New York Department of Financial Services (NYDFS). The spokesperson also said the exchange would continually monitor the SEC-Paxos situation before adding:
“Stablecoins are a critical safety net for investors seeking refuge from volatile markets and limiting their access would directly harm millions of people across the globe.”
At the time, Zhao also explained that Paxos’ funds were safe and fully covered by ratified bank reserves. The Binance CEO further stated that the NYDFS directed Paxos to desist from minting BUSD tokens any further amid the SEC’s allegations. However, he also expressed continued support for BUSD “for the foreseeable future.” Zhao also said customers can expect necessary product adjustments when users eventually migrate to other stablecoins.
Zhao reckoned that the SEC’s BUSD probe has triggered the crypto industry and would result in the coin’s decline over time.