The Risky Rise of TUSD: How Binances Favorite Stablecoin Threatens the Market

The Risk Posed by TrueUSD to the Crypto Market

A recent report by crypto research firm Kaiko highlights the risk posed by TrueUSD (TUSD), a centralized stablecoin favored by crypto exchange Binance, to the cryptocurrency market. The report reveals that stablecoins, which dominate cryptocurrency trading, lack transparency in their reserves. TUSD, in particular, poses the biggest risk due to disruptions in its reserve reporting and the implosion of its banking partner Prime Trust. The trading volume of TUSD has grown dramatically in recent months, accounting for 19% of transactions on centralized crypto exchanges. This highlights the dependence of crypto markets on stablecoins and the vulnerabilities they present.

Key Points:

74% of all transactions on centralized crypto exchanges involve stablecoins, while only 23% involve fiat currencies.
TrueUSD’s trading volume has grown from less than 1% to 19% in three months.
Stablecoins pegged to the U.S. dollar have a combined market capitalization of $128 billion.
Other stablecoins, such as Binance USD (BUSD) and USDC, have also faced turmoil and disruptions.
TUSD, with its lack of transparency around reserves and corporate structure, poses the biggest risk to the market.

Crypto markets are highly dependent on centralized stablecoins, which often lack transparency in their reserves. While efforts have been made to improve transparency, TUSD remains a relatively unknown and risky stablecoin. TUSD, backed by fiat assets, was acquired by Asian conglomerate Techteryx in 2020 and has faced scrutiny for its lack of information and connections to Tron founder Justin Sun. The token’s rapid rise can be attributed to Binance’s promotion of zero-fee trading. The vulnerabilities of stablecoins, as highlighted by recent disruptions, expose the crypto market to risks and uncertainties.

Hot Take:

The reliance on centralized stablecoins, such as TrueUSD, poses a significant risk to the crypto market. The lack of transparency in reserves and corporate structure undermines the stability and trustworthiness of these stablecoins. As the market becomes increasingly dependent on stablecoins, it is crucial to prioritize transparency and accountability to mitigate potential risks. The recent disruptions and volatility in stablecoins highlight the need for greater scrutiny and regulation in this space.