Which Coins Will Binance Turn To After The SEC Nightmare?

Binance USD (BUSD), the issuer of Paxos, is under scrutiny by US government agencies. In response to this, Binance started printing TrueUSD (TUSD). What will happen next? Crypto expert Camille Lemmens seeks to answer that question.

Binance moves to TUSD stablecoin

As you follow on Kriptokoin.com, the US authorities have put Binance USD (BUSD) under investigation. However, don’t be fooled into thinking that Binance or Binance.US are in trouble. For now, they are letting BUSD cool off and focusing on a different stablecoin like TrueUSD or TUSD to enable trades. So, let’s see what that means for Binance and BUSD.

What is TrueUSD (TUSD) stablecoin?

TrueUSD (TUSD) is a fiat-backed stablecoin. TrueCoin LLC is the owner/issuer and was launched in April 2018. To the US dollar, this stablecoin has a 1:1 peg. TrueCoin LLC is implementing Chainlink’s Proof-of-Reserve. This means that it controls mining with chain verification in real time. It also shows off-chain reserves.

• Besides TUSD, TrueCoin LLC also offers TCAD, TGBP and TAUD.
• TrueCAD is a Canadian dollar-backed stablecoin.
• TrueGBP is a GBP-backed stablecoin.
• TrueAUD is an AUD-backed stablecoin.

In May 2018, Binance listed this stablecoin on its exchange. In the same year, it reached a market capitalization of $100 million. It achieved a market capitalization of $500 million in September 2020. The current market cap is $1.142 billion, according to CoinGecko. Part of this increase in market capitalization is due to Binance’s now printing TUSD. They use TUSD to facilitate transactions instead of the problematic BUSD. In the last week of February, Binance minted at least $130 million in TUSD. Therefore, TUSD currently ranks fifth in market cap for stablecoins.

It is also a regulated stablecoin. It has been authorized as the official digital currency in Dominica since October 2022. In addition, it is also a medium of exchange in this country. In the US, it is also compatible with some regulatory platforms. For example, with the US Financial Crimes Enforcement Network (FinCEN). Or the Bank Secrecy Act. It is also available on twelve public blockchains. For example, Ethereum, Tron, BSC, Polygon or Phantom.

After depositing USD as collateral, you can print and redeem on their website. You can also use it as a hedge against crypto volatility or in DeFi. The image below shows the real-time supply of the three stablecoins in blue. Black represents fiat money entrusted.

Source: Trust Explorer

Binance, Binance.US and BUSD

It’s not Binance or Binance.US that mints the BUSD stablecoin. This is actually Paxos, a New York City-based crypto firm. It also has offices in London and Singapore. But in January 2023, the New York State Department of Financial Services (NYDFS) ordered them to stop issuing BUSD. This caused the BUSD market cap to drop from $16 billion to $10 billion. However, Paxos assured that the entire supply of BUSD is backed by the dollar. In other words, BUSD holders can use their tokens. Since February 21, 2023, Paxos has stopped issuing new BUSD tokens.

The SEC has stepped in, too, and they can take action, too. They may view BUSD as unregistered security. There could be complications for all stablecoins in the US should the SEC decide to sue. There is a lot to be said about whether stablecoin is a security or not. But that’s a different discussion worth following.

Meanwhile, Paxos mentioned that BUSD holders can use their tokens. This will be possible, at least until next year. Binance acted fast and switched to printing TUSD. This seems to be their current response to the BUSD situation. However, whether they will stick to TUSD remains an open question. It all depends on how the BUSD situation develops. It is quite possible that Binance and Binance.US are looking for a new issuer.

Currently, Binance TUSD looks set to continue printing. It is highly unlikely that Binance will enter USDC or USDT to enable trading. In the long run, the crypto exchange will prefer to have direct or indirect control over a stablecoin like BUSD. So, the final word about this evolving story is still in the air.