Binance Explores Non-Dollar Options for Stablecoin Replacement

Binance, recognized as the seventh most valuable cryptocurrency globally, is actively seeking to move away from its underperforming stablecoin and is investigating different formats, pegs, and partnerships. With the Binance USD (BUSD) effectively nullified by US regulators, Binance’s Chief Strategy Officer Patrick Hillmann revealed that numerous private and public entities are eager to collaborate with the leading cryptocurrency exchange on a similar initiative. Hillmann also noted that Binance is considering various issuers and stablecoins not pegged to the dollar, suggesting that the new options may not be dollar-reliant. PoundToken.io, a stablecoin issuer based in the UK, is emerging as a significant contender in the UK stablecoin market and may be considered alongside euro or yen-backed tokens.

In a recent tweet, Changpeng Zhao, widely known as CZ and the CEO of Binance, made a bold prediction regarding the future of stablecoins. CZ commented that non-dollar stablecoins could potentially supersede their US dollar-pegged counterparts soon.

Changpeng Zhao stated:

“Given the increased scrutiny surrounding US dollar-based stablecoins, I anticipate that our industry will be compelled to explore alternative options such as euro or yen-backed tokens. This has encouraged us to seek alternatives from diverse regions and jurisdictions.”

Regulatory challenges have been a primary factor in the slow adoption of non-USD stablecoins, with issuers facing hurdles in achieving proper regulation. Nevertheless, the current landscape presents a chance for the growth of non-USD stablecoins. Hillmann asserted that Binance, due to its extensive reach and size, will continue to be a major player in the stablecoin arena, and the denomination of trading pairs in specific stablecoins fosters significant network effects.

Recently, the New York Department of Financial Services instructed Paxos, which issues an Ethereum blockchain version of BUSD, to cease creating additional tokens, citing noncompliance with obligations for “tailored, periodic risk assessments” and diligence checks on Binance. This language may imply concerns regarding money laundering and/or know-your-customer issues. The US Securities and Exchange Commission is also examining Paxos for potential investor protection law violations. Hillman is of the opinion that BUSD is nearing its end, and Binance-peg BUSD, a derivative version created by Binance for non-Ethereum blockchains, is also expected to wind down.

Binance’s situation in the US is precarious, as regulators are intensifying their oversight of cryptocurrencies on various fronts. Last month, Binance disclosed that its US banking partner, Signature Bank, would no longer process dollar-denominated transactions for individuals with balances below $100,000. Hillman confirmed that Binance is currently without a US banking partner, and several other banks have been warned to disengage from servicing crypto platforms operating in the US. Despite this, Hillman remains hopeful that Binance will sustain its relevance in the stablecoin sector, especially in Europe and the Middle East.



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