Binance’s terminated partnership with Paxos leads to the launch of stablecoin FDUSD, and Binance plans to collaborate with other stablecoin projects.
Key Points
- Binance’s CEO, CZ, revealed the introduction of stablecoin FDUSD after the partnership with Paxos for BUSD was terminated by regulators.
- Binance plans to collaborate with other companies specializing in stablecoins, with FDUSD being the first partnership and hints of more to come.
- The termination of the Paxos partnership led Binance to pursue regulated stablecoins, but regulatory challenges highlight the risks involved.
- Binance is also interested in euro-based digital assets and algorithmic stablecoins, while CZ sees the potential transformation of the future financial network through blockchain and AI.
The Chief Executive Officer of Binance, Changpeng Zhao (CZ), recently revealed that the terminated partnership with Paxos has led to the introduction of the stablecoin FDUSD. In 2019, Binance and Paxos collaborated to launch BUSD, a USD-denominated stablecoin. However, the New York state regulators instructed Paxos to halt the minting of new tokens earlier this year.
And we’re live!
Tune in to our Twitter Space with @cz_binance below 👇https://t.co/KzU2bmdgxG
— Binance (@binance) July 31, 2023
CZ clarified that Binance currently has no plan to list its own stablecoin, but instead intends to collaborate with other companies specializing in this product.
‘Given That Everything is a Risk, Let’s Diversify’
Zhao shared Binance’s plans for stablecoins during a recent Twitter space. The crypto exchange recently extended its support to FDUSD, a stablecoin issued by Hong Kong custodian First Digital Trust. CZ mentioned that many other deals could follow this partnership as Binance has been cooperating with stablecoin projects from various regions. He also hinted at another partnership on the horizon.
The Suspended Collaboration with Paxos and the Pursuit of Regulated Stablecoins
According to CZ, the increased efforts in the stablecoin field are a result of Binance’s suspended collaboration with Paxos. The New York Department of Financial Services ordered Paxos to halt the issuance of the Binance USD (BUSD) stablecoin earlier this year. Prior to this, the US SEC accused Paxos of selling unregistered securities when minting the token. Despite these challenges, Paxos committed to supporting BUSD until February 2024, allowing customers enough time to convert their holdings into Pax Dollar (USDP) or cash them out in USD.
CZ acknowledged that some participants have raised concerns about Tether’s ability to back its substantial market capitalization. While acknowledging the token’s expansion, he added that he had never seen any audits related to Tether. Binance’s partnership with Paxos was intended to offer a “regulated stablecoin” that underwent audits. However, the regulators unexpectedly shut it down, highlighting the unforeseen risks associated with regulated stablecoins.
Binance’s Interest in Euro-based Digital Assets and Algorithmic Stablecoins
CZ mentioned Binance’s interest in digital assets tied to the euro’s valuation and disclosed that the company has a team working on algorithmic stablecoins. However, he cautioned that these stablecoins also carry risks as they are pegged to the valuation of another token that is typically highly volatile.
In addition to stablecoins and Binance’s plans in that realm, CZ offered his perspective on the cryptocurrency industry as a whole. He pointed out that he is not a “good predictor” but emphasized the potential transformation of the future financial network through blockchain technology and Artificial Intelligence. While both have the potential for impact, Zhao believes AI will have a more direct influence. Nevertheless, he stated that he goes “with the flow” and relies on his team to guide some of his decisions.