What Stablecoin Will Replace The Dying BUSD On CubFinance?
The market cap of BUSD
The BUSD (Binance USD) is a centralized stablecoin issued by Paxos in New York state. It is backed by cash, commercial papers, US treasury bonds etc. the BUSD token is an ERC-20 token on Ethereum. The reason why it is called Binance USD is that Binance has bought the right to use that brand name. Paxos is based in the state of New York and regulated by the New York Department of Financial Services. The BUSD has existed since 2019 and has a good track record. The state of New York has a strict regulatory framework in place.
The token known as BUSD on CubFinance is BUSD Binance-pegged, which is a wrapped token on Binance Smart Chain, a faster cheaper Ethereum clone chain released by Binance.
After the collapse of FTX, the US Securities and Exchanges Commission (SEC) decided to act against Paxos and delivered a Wells notice to Paxos on grounds of BUSD being an unregulated security. Soon after that, the New York Department of Financial Services ordered Paxos to stop issuing more BUSD tokens, which is why the market cap of BUSD dropped significantly. BUSD has held its peg well and it is still around $12 billion as I'm writing this but the BUSD keeps shrinking in market cap as BUSD tokens keep being redeemed for real US dollars.
It seems to me the BUSD has a few weeks to a few months left before it is completely removed from circulation. What this means is that CubFinance is forced to replace BUSD with another stablecoin if bHBD (a wrapped version of the Hive Backed Dollar on Hive on Binance Smart Chain) is to be part of a stablecoin pool. There are many alternatives such as USDT, DAI and USDC.
I think it is prudent to consider this matter carefully, make a decision and to implement the shift well before the market cap of BUSD shrinks enough to make it unstable. I don't think we are close to that, yet, but I think it's better to be proactive.
Posted Using LeoFinance Beta
Unfortunately for DeFi platforms, BUSD is an important stablecoin, and many of the new crypto projects are based on this coin. It is unfortunate that the SEC continues its witch hunt, however, this type of action only proves that decentralization is a better way to protect our assets.
I think they should all be in a hurry to transition to another stablecoin. Paxos is based in NY and regulated there, so there's little Binance can do to stop the SEC from wrecking BUSD. Fortunately, there are many centralised or decentralized alternatives.