The crypto industry will “probably” start using euro, yen, or Singapore dollar-based stablecoins in the future, reducing its reliance on United States dollar-based stablecoins, according to Binance CEO Changpeng Zhao, also known as “CZ.”
CZ gave the statement in a Feb. 14 Twitter Spaces event in answer to a question about the crypto industry using gold as a standard of value instead of the U.S. dollar. CZ agreed that it “makes sense” to use gold. However, “most people’s costs are still in fiat currencies.” For this reason, most people calculate their investment returns in dollars, which is why U.S. dollar-backed stablecoins are “still important.”
However, CZ argued that the U.S. government’s recent actions against U.S. dollar stablecoins will probably lead the global crypto industry to rely on other currencies such as the euro, yen and Singapore dollar to back stablecoins, as he explained:
“I think given the current pressure and current stances taken by the regulators on the U.S. dollar-based stablecoins, I think that as you said the industry will probably move away to non-U.S.-dollar- based stablecoins […] as a result of this we probably will see more euro based or other Japanese yen, Singapore dollar based stablecoins, so it’s actually prompted us to look for more options in different places.”
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CZ said that algorithmic stablecoins may also play a larger role in the crypto ecosystem going forward. However, he cautioned that algorithmic stablecoins are “inherently gonna have risks” that fiat-backed stablecoins don’t have. In CZ’s view, these risks need to be disclosed transparently to users, and reserves for fiat-backed stablecoins also need to be disclosed. This way, “users can very clearly decide what is going on” and make up their own minds about which stablecoins they want to hold or use.
CZ’s statements came just a day after the SEC accused U.S. dollar-based stablecoin Binance USD (BUSD) of being an unregistered “security” under U.S. laws. The algorithmic stablecoin TerraUSD (UST) lost its peg to the U.S. dollar in May, causing over $20 billion in losses to investors.