Binance, the world’s largest cryptocurrency exchange by volume, announced the listing of a new stablecoin called FDUSD. This decision comes amidst contrasting statements made by Binance CEO Changpeng Zhao (CZ) on the stability of stablecoins.
In the past, Zhao bet on the industry distancing itself from dollar-linked stablecoin listings.
CZ Reservations and Binance Regulatory Challenges
FDUSD is a 1:1 USD-backed stablecoin backed by Hong Kong-based First Digital Trust Limited. Before Binance announced the listing of FDUSD on July 26, it was launched on the BNB Chain last month.
Commenting on the listing, Vincent Chok, CEO of First Digital Trust, emphasized transparent alternatives to conventional assets, stating,
“Recent events have shown that conventional assets are not immune to the risk and volatility posed by external events.”
That said, CZ noted his ‘unpopular’ opinion in a tweet, where he said, “‘stable’ coins… are not always stable,” recommending investors learn risk management.
In February, CZ expressed his reservations about the future of dollar-linked stablecoins in the face of regulatory scrutiny. During a Twitter Spaces session, CZ stated,
“The amount of pressure put on stablecoins is quite significant. Multiple agencies are applying pressure there.”
He also predicted it would shrink the USD stablecoin market, hinting at the possibility of using stablecoins pegged to other currencies.
CZ has also distanced himself from the Binance-branded stablecoin, BUSD, in the past. This came after heavy regulatory action against the stablecoin that led to stopping its minting.
The top exchange has been grappling with legal challenges, with the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) both suing the business and its executive.
Need for Crypto Clarity in the US
The stablecoin industry is facing a lack of comprehensive regulation in the US. In a recent CNBC interview, Timothy Massad, former chair of the Commodity Futures Trading Commission, said it is important to address the risks associated with stablecoins. He warned against ignoring stablecoins and advocated for a regulatory framework acknowledging their potential.
He said,
“I think our regulators often take the view that, well, it’s better just to try to keep them out of the regulatory perimeter, but I don’t think that really works, and I think, you know, the competition from stablecoins could be useful, again, if we address the risks, and they are significant.”
In addition, Massad highlighted the potential of stablecoins in creating a faster payment mechanism in the US. Meanwhile, the launch of FDUSD adds to the ongoing discussions surrounding stablecoins’ role in the broader markets. CZ’s seemingly conflicting statements on their stability raise another debate as they navigate regulatory challenges.
Disclaimer
In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content.
Leave a Reply