It seems that Binance’s CEO Changpeng Zhao has some doubts about stablecoins backed by fiat money.
Changpeng Zhao Says that Banks Represent a Risk To Fiat-Backed Stablecoins
Binance CEO Changpeng Zhao in his tweet on March 12 informed that banks are having problems with fiat-backed stablecoins.
“We need stableсoins backed by cryptocurrencies,” other Twitter users said. “Do Kwon truly had the right concept, but failed badly in implementation,” Сhangpeng Zhao remarked.
Сhangpeng Zhao, CEO of leading cryptocurrency exchange Binance, has expressed concern about fiat-backed stableсoins. Zhao argues that banks may pose risks to stableсoins pegged to fiat currencies such as US dollars and euros. Additionally, Zhao suggests that cryptocurrency exchanges should be more proactive in protecting stableсoins from potential threats.
It is worth noting that Zhao’s remarks come at a time when stableсoins are getting very popular in the cryptocurrency industry. These digital assets offer a way to store value without the volatility associated with other cryptocurrencies like Bitcoin. However, like any new technology, there are inherent risks.
Despite these concerns, stablеcoins are a popular alternative for many cryptocurrency traders. They enable to transfer cash easily between exchanges without reverting to fiat currencies such as USD or EUR. Moreover, stableсoins also can be used as collateral for loans and other financial assets in decentralized finance (DeFi) applications.
As more people start using stablecoins, issuers, exchanges, and other stakeholders must work together to mitigate the risks and keep these digital assets alive over the long term. It appears that in these jurisdictions, the players most likely to benefit in this field are the regulated financial institutions, i.e., banks. Cryptocurrency does not “destabilize the old financial system”, but makes it significantly more efficient.
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