CZ Outlines Need for Stablecoins Pegged to Other Fiat Currencies

The CEO of Binance also admitted that the two loudest crashes of 2022 have changed the regulators’ approach.

The founder and chief executive of Binance spoke in a Twitter AMA (Ask Me Anything) about different hot topics in the cryptocurrency community as of now, with one of them being expectedly the BUSD clampdown from US authorities.

He suggested that the global cryptocurrency ecosystem would benefit if dollar-pegged stablecoins face rivals from other such tokens pegged to different fiat currencies.

Not Just USD
The cryptocurrency community witnessed enhanced regulatory scrutiny in the past few days coming from various US watchdogs. It began with rumors that the SEC will go after staking, which materialized days later when the securities regulator halted Kraken’s staking services.

With concerns growing that this crackdown will only intensify and possibly affect Coinbase, which has a similar platform, the company’s stock went on a downfall, closing the week with a massive 22% drop. Cryptocurrency asset prices also declined.

However, that was just the start, as the SEC reportedly then sent a Wells notice to Paxos suggesting it could take legal action against the issuer of Binance USD because it allegedly sells unregistered securities with the stablecoin.

Hours later, the New York Department of Financial Services ordered Paxos to stop issuing BUSD. Binance and CZ, in particular, weighed in on the matter, saying BUSD is issued and custodied fully by Paxos.

In an AMA from today, Zhao said the industry will eventually need a more diversified selection of stablecoins, including such pegged to other fiat currencies like the Singaporean dollar and the Japanese yen. In fact, he added that an yen-based stablecoin issuer had already contacted the world’s largest exchange.

Addressing reports that Circle had warned the NYDFS about Binance being unable to maintain adequate token reserves, CZ said he did not believe the US firm would do so because it could come back to haunt it as well.

FTX, Terra Collapses Changed Everything
The US has always had a controversial approach when it comes down to regulating crypto, but Zhao asserted that the crashes of Terra and FTX in 2022 have changed everything. He explained that watchdogs have become more “stringent,” while many companies and banks from traditional finances no longer want to cooperate with participants from the digital asset industry.

CZ admitted that Binance had lost traditional banking partners, perhaps referring to the recent drama with Signature Bank.