Binance mints 50M TrueUSD days after Paxos ordered stop issuing BUSD

Binance CEO Zhao had earlier predicted that the market for stablecoins with USD backing will “shrink” despite the minting of $50 million in 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 Message 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.

The industry will likely switch to a non-U.S. dollar-based stablecoin, returning to algorithmic stablecoins, given the regulators’ present positions on the U.S. dollar-based stablecoin.

“Numerous agencies are applying pressure there. The market for stablecoins pegged to the US dollar will simply shrink as a result, he continued.

CZ stated that they are currently investigating other choices since “this has encouraged us to search for more options in different regions.”

The CEO noted that they are now going to explore more into stablecoins based on the euro and Japanese yen, even if he had previously stated that Binance will provide greater USD support in the short term in the hope that BUSD “winds down over time.”

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.

Intriguingly, the CEO of Binance noted that he had never been overly optimistic about the BUSD stablecoin’s prospects for success in the first place: “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.”

TUSD was an interesting stablecoin that Binance automatically converted to BUSD in September to improve liquidity and capital efficiency for its users. Moreover, USDC and USDP Stablecoins were automatically converted stablecoins (USDP). In a few of 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.