In a Twitter Spaces event on Feb. 14th, Binance CEO Changpeng Zhao (aka CZ) said that the cryptocurrency industry might move to non-dollar standard stablecoins. According to CZ, the adoption of stablecoins based on the Euro, Yen, or Singapore Dollar is a likely probability. The move will reduce the reliance on US Dollar-based stablecoins, CZ added.
CZ’s statement comes as an answer to a query concerning the cryptocurrency industry’s use of gold as a unit of measure instead of the US dollar. CZ agreed that using gold “makes sense.” Nonetheless, the majority of people’s expenses are still in fiat currencies. Because most investors compute their investment returns in dollars, stablecoins backed by the US dollar are therefore still significant.
The U.S. government’s recent efforts against U.S. dollar stablecoins, according to the Binance chief, would likely force the international cryptocurrency sector to rely on other currencies like the euro, yen, and Singapore dollar to support stablecoins.
Furthermore, the Binance founder said that algorithmic stablecoins might play a larger role in the future of the cryptocurrency sector. Nonetheless, he did warn that algorithmic stablecoins pose risks that aren’t present in fiat-backed stablecoins. In CZ’s opinion, consumers need to know of these dangers, as well as the reserves for fiat-backed stablecoins.
Binance in the battle for its cryptocurrency stablecoin
CZ’s remarks come just after the SEC claimed that Binance USD (BUSD), a stablecoin based on the US dollar, had not been properly registered as a “security” under US law. Paxos, the issuer of Binance USD (BUSD) was ordered to stop issuing the token. However, the firm will continue to manage BUSD redemptions.
The development sent waves of fear into the cryptocurrency community. Investors began pulling their funds out of BUSD and placing them elsewhere. Paxos has burned over $700 million worth of BUSD since Monday. CZ said that the market cap for BUSD will only decrease over time. At press time, BUSD’s market cap stood at $15.2 billion.