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Some people in the crypto community became concerned when some analysts compared BFUSD to Terra’s failed USTC. Meanwhile, Tether-backed Quantoz launched euro- and dollar-backed stablecoins, EURQ and USDQ. The stablecoins are fully compliant with MiCA regulations and will enhance digital payments across Europe. Tron is also becoming a force to be reckoned with in the stablecoin industry as Tether recently minted $1 billion USDT on Tron without incurring any fees.
Binance Clarifies BFUSD Is Not a Stablecoin
Binance addressed some of the concerns surrounding its upcoming high-yield “BFUSD” token. The exchange clarified that it is neither a stablecoin nor has it been officially launched.
The clarification came after speculation was ignited by a Nov. 17 post by crypto news aggregator Zoomerfied, which suggested Binance was preparing to launch a stablecoin with a 19.55% annual yield. This did not sit well with some people as it prompted comparisons to Terraform Labs’ failed algorithmic stablecoin, TerraClassicUSD (USTC).
In response to the speculation, Binance confirmed through its customer support on X that BFUSD is a reward-bearing margin trading product, not a stablecoin. Binance also shared that the product has not launched yet, and is designed for futures trading. This will allow users to utilize BFUSD as collateral without the need for staking or locking funds. Daily rewards will be distributed through airdrops to users’ UM Futures Wallets based on snapshots, and the amount of BFUSD available to traders will be tied to their VIP level on Binance.
The initial post triggered a lot of reactions from the crypto community, and many ended up drawing parallels to the infamous collapse of Do Kwon’s Terra ecosystem. Terra’s algorithmic stablecoin USTC once promised a 20% annual yield through the Anchor Protocol, but collapsed in May of 2022. This wiped out billions of dollars in value and led to a broader crisis in the crypto market. USTC lost its $1 peg and plummeted below $0.01. Its companion token LUNA fell from $80 to less than a cent in just days.
Some people are specifically skeptical about BFUSD’s yield model, and questioned its sustainability and whether it bore similarities to previous high-yield failures. Traders like RunnerXBT and OG Bitcoiner Jameson Lopp reacted very critically. RunnerXBT alluded to the unrealistic promises of Anchor and others questioned whether users themselves might be the source of the yield.
A stablecoin is a type of cryptocurrency that is designed to maintain a stable value by pegging its price to a reserve asset, such as a fiat currency like the U.S. dollar. It could also be pegged to other assets like gold or a basket of currencies. This stability is achieved through mechanisms like 1:1 fiat backing, algorithmic supply control, or collateralization with other cryptocurrencies.
Stablecoins combine the efficiency and decentralization of blockchain technology with the price stability of traditional assets, which makes them very popular for use in digital payments, remittances, trading, and as a hedge against market volatility.
While Binance’s clarification was able to quell some fears, it is very clear that there are still some lingering concerns in the crypto space about high-yield products and their resemblance to past failures. For many, the memory of Terra’s collapse is still very fresh.
Tether-Backed Quantoz Unveils New Stablecoins
While Binance very clearly distanced itself from stablecoins, there have still been some other new developments in the stablecoin industry. Dutch fintech company Quantoz Payments, backed by Tether, Kraken, and Fabric Ventures, launched two new stablecoins, EURQ and USDQ, on Nov. 18.
These euro- and dollar-backed tokens are licensed by the Dutch Central Bank as e-money tokens (EMTs) and are fully compliant with the European Union’s Markets in Crypto-Assets Regulation (MiCA). They are designed to provide a secure and regulated digital payment solution across the European Economic Area, and are fully backed by fiat reserves, with an additional 2% reserve held by Quantoz to enhance transparency and mitigate risks.
Kraken and Bitfinex will begin listing EURQ and USDQ on Nov. 21, and will offer access to eligible clients across Europe. The stablecoins will streamline digital transactions, making them faster, cheaper, and more transparent for corporate and consumer use.
This launch is a major step forward in regulated digital finance in the EU by taking advantage of MiCA’s framework to encourage more trust in stablecoin issuance. Anil Hansjee of Fabric Ventures appreciates MiCA’s role in simplifying stablecoin issuance in Europe, and believes it is very important for the region’s financial ecosystem.
Despite supporting Quantoz in the initiative, Tether CEO Paolo Ardoino is concerned about MiCA’s requirements which mandate that stablecoin issuers hold at least 60% of their reserves in European banks. He warned that this provision could introduce serious systemic risks to banking, as banks often loan out up to 90% of their reserves.
On the other hand, Norway is a lot more supportive of MiCA, and its central bank, Norges Bank, endorsed the regulatory framework on Nov. 9. The country sees MiCA as a potential tool to improve financial stability and is exploring its applicability to a central bank digital currency (CBDC). While Norway still has to finalize its plans for CBDC issuance, it is considering the integration of a CBDC-based cross-border payment system to enhance its financial infrastructure.
Tron Challenges Ethereum in Stablecoin Market Share
Tether recently minted $1 billion worth of USDT stablecoins on the Tron network, and completed the transaction without incurring any fees, according to data from Arkham Intelligence. The transaction originated from a “black hole address” and was sent to Tether’s multisignature wallet on Tron.
(Source: Arkham Intelligence)
Shortly after, the funds were transferred to Tether’s treasury, which was also done with zero transaction fees. Tron has become quite popular with stablecoin operations because of its low fees. This makes it especially advantageous for payments and remittances in developing regions where high fees can diminish transaction value.
Currently, Tether’s transparency page shows $62.7 billion USDT authorized on Tron, closely rivaling Ethereum’s $62.9 billion. Tron’s very impressive stablecoin activity contributed to its $577 million revenue in Q3 2024 and its position as the second-largest blockchain ecosystem by stablecoin market share.
In August of 2024, Tron accounted for about 37.9% of the stablecoin market share, second only to Ethereum’s 55.7%. During that month, Tether also minted an additional $1 billion USDT on Tron. CEO Paolo Ardoino clarified that these tokens were authorized but not yet issued, and held in inventory until required for issuance.
Stablecoin supply is an important metric for traders to keep in mind as it can serve as an indicator of market sentiment and investor activity. A rise in newly minted stablecoins suggests bullish market speculation and increased trading interest, while a decline could mean reduced market activity.