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“Banks Are a Risk to Fiat-backed Stablecoins,” Binance CEO Says

Published 03/12/2023, 05:17 AM
Updated 03/12/2023, 05:30 AM
© Igor Faun “Banks Are a Risk to Fiat-backed Stablecoins,” Binance CEO Says
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  • Binance CEO worries about USDT and USDC following US bank collapse.
  • Emabattked Silicon Valley Bank has $209 billion in total assets.
  • USDC has over $3 billion with the troubled US Silicon Valley Bank.

Changpeng Zhao, the CEO of Binance, the largest crypto exchange, expressed concerns on Twitter today about the safety of stablecoins baked with fiat currencies following the bankruptcy of two prominent banks in the United States.

“Banks are a risk to fiat-backed stablecoins,” Zhao tweeted. A Twitter blue subscriber reasoned that Bitcoin and other cryptocurrencies came to life to avoid the failures of the traditional financial system. “If you mix crypto with fiat, you get trapped,” they argued.

Furthermore, another crypto enthusiast suggested that the crypto industry needs to have crypto-backed stablecoins to avoid overreliance on fiat currencies. In response, the CEO of Binance said the founder of the ill-fated Terra Luna blockchain, Do Kwon, had the idea but “failed miserably on execution.”

Notably, crypto investors lost over $60 last year to the collapse of the Terra Luna projects, which included a crypto-backed stablecoin, UST, and its native utility token, LUNA. Similarly, the two US banks that went bankrupt last week are Silicon Valley Bank (SVB), with $209 billion in total assets, and Silvergate, a crypto-focused bank.

Some of the fiat-backed stablecoins on the market include USDT, with over $72 billion in market share, and USDC, with nearly $39 billion market capitalization. According to reports, USDC has over $3 billion in reserves in the troubled US Silicon Valley Bank.

Yesterday, the Binance CEO mocked US detractors as SVB and Silvergate became insolvent and unable to process customer withdrawals. “They FUD us, and banks fail,” Zhao tweeted, referring to how Binance remained strong despite the constant negative propaganda it suffered from US entities that hoped the exchange would fail.

The post “Banks Are a Risk to Fiat-backed Stablecoins,” Binance CEO Says appeared first on Coin Edition.

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