In a recent Twitter Spaces event, Changpeng Zhao, CEO of Binance, predicted that the crypto industry would begin using stablecoins based on currencies such as the euro, yen, and Singapore dollar in the future.
This will be to reduce the industry’s reliance on the United States dollar-based stablecoins. While it makes sense to use gold as a standard of value, CZ explained that most people’s costs are still in fiat currencies.
For this reason, most investors calculate their investment returns in dollars, which is why U.S. dollar-backed stablecoins remain essential.
However, CZ argues that the recent actions taken by the U.S. government against U.S. dollar stablecoins will likely push the global crypto industry to rely on other currencies to back stablecoins.
In his view, this would result in an increased usage of euro, yen, and Singapore dollar-based stablecoins. CZ believes that algorithmic stablecoins may play a larger role in the crypto ecosystem going forward, but he cautioned that these types of stablecoins are “inherently gonna have risks” that fiat-backed stablecoins do not have. He emphasized that these risks need to be disclosed transparently to users.
CZ’s comments come on the heels of the SEC’s accusation that Binance USD (BUSD), a U.S. dollar-based stablecoin, is an unregistered “security” under U.S. laws.
In May last year, the algorithmic stablecoin TerraUSD (UST) lost its peg to the U.S. dollar, resulting in over $20 billion in losses for investors.
CZ’s statements indicate that the crypto industry is preparing for a future in which stablecoins are backed by a more diverse range of currencies.