Binance, the famous cryptocurrency exchange, has created roughly $50 million worth of TrueUSD just days after rumours surfaced that Paxos and Binance USD (BUSD) were under regulatory review by US authorities (TUSD).
Data from Etherscan indicates that the transaction occurred on February 16. It also occurs two days after Binance CEO Chanpeng “CZ” Zhao stated in a Twitter Space on February 14 that Binance would seek to “diversify” its stablecoin holdings away from BUSD.
CZ had previously stated that the recent regulatory action by the United States Securities Exchange Commission and the New York Department of Financial Services over the long term may lead to a fall in the dominance of U.S. dollar-backed stablecoins despite making nearly $50 million in TUSD from the TrustToken platform’s smart contract.
CZ said,
“I think with the current stances taken by the regulators on the U.S. dollar-based stablecoin, the industry will probably move away to a non-U.S. dollar-based stablecoin, back to algorithmic stablecoins.”
He further added,
“There’s multiple agencies putting applied pressure there. It is just going to shrink the U.S. dollar-based stablecoin market.”
CZ stated that they are now investigating alternative choices after being motivated to search for other options in various locations.
While the CEO noted that Binance would extend greater support for USD Coin (USDC) and Tether (USDT) in the near future in the hope that BUSD “winds down over time,” he also mentioned that they are now working to investigate new stablecoins based on the euro and the Japanese yen.
CZ stated that the existing circulating quantity of BUSD is there and safe, and when more individuals want to redeem, they will be burned in regards to BUSD.
Interestingly, the CEO of Binance also said that he was never overly optimistic about the BUSD stablecoin’s success.
He stated,
“To be honest BUSD was never a big business for us, when we started I actually thought the BUSD project may fail, so we actually don’t have very good economics on that collaboration.”
Binance Auto-Converts TUSD to BUSD
TUSD was an interesting stablecoin that Binance auto-converted to BUSD in September to improve liquidity and capital efficiency for its users. Additionally, USDC and USDP Stablecoins were automatically converted to stablecoins (USDP). In a few weeks, this increased BUSD’s market share in stablecoins from 10% to 15%.
TUSD was introduced by TrustToken on March 5, 2018. It is present on the Tron, Polygon, Avalanche, and Ethereum networks.
Every time a buyer wires USD to a third-party escrow account holding USD deposits on behalf of Prime Trust, new TUSD are created. The trader’s designated ERC-20 or BEP-2 wallet address will receive TUSD, which will then be transferred there in a 1:1 ratio to any USD that was sent there.
