Following comments made on Tuesday by Changpeng Zhao (CZ), CEO of Binance, regarding the cryptocurrency exchange’s connection to the well-known Paxos Trust Co.-issued token, the Binance USD (BUSD), the third-largest stablecoin by market size, has returned to its intended $1 peg.
After falling to a two-year low of $0.9950 on Monday after the New York Department of Financial Services (NYDFS) ordered Paxos to halt producing more of the tokens, BUSD, which is backed by short-term treasuries and cash-like assets, surged to $0.9997 in the early hours of Wednesday in Europe.
On Tuesday, during a Twitter Spaces, CZ said,
“BUSD is not issued by Binance…. We have an agreement to let them [Paxos] use our brand, but that’s not something that we created.”
As some crypto aficionados noted earlier this week on Twitter, Zhao’s remarks certainly helped traders’ perceptions of the tokens.
Since Monday, Paxos has burnt more than $700 million in BUSD tokens.
Talking about the current support for other stablecoins, CZ said,
“With BUSD gone, BUSD slowly winding down over time, we will continue to work with more stablecoin issuers or creators.”
Binance CEO: Stablecoins To Move To Non-Dollar
On February 14th, Binance CEO Changpeng Zhao (aka CZ) said that the cryptocurrency sector might switch to stablecoins that aren’t pegged to the dollar. Stablecoins based on the Euro, Yen, or Singapore Dollar are likely to be adopted, claims CZ. According to CZ, the change will lessen the dependency on stablecoins with US Dollar backing.
CZ’s response is in response to a question on the cryptocurrency sector’s usage of gold as a unit of measurement rather than the US dollar. Utilizing gold “makes sense,” CZ concurred. But the vast bulk of expenditures are still made in fiat money. Stablecoins backed by the US dollar are still important because the majority of investors calculate their investment returns in dollars.
According to the CEO of Binance, the recent U.S. government actions against U.S. dollar stablecoins will probably force the global cryptocurrency market to rely on other currencies like the euro, yen, and Singapore dollar to support stablecoins.
The founder of Binance also said that algorithmic stablecoins might have a bigger impact on the cryptocurrency industry in the future. The hazards associated with algorithmic stablecoins, however, are different from those associated with fiat-backed stablecoins, he said. Consumers should be aware of these risks as well as the fiat-backed stablecoin reserves, in CZ’s opinion.