Changpeng Zhao: Banks Represent A Risk To Fiat-backed Stablecoins

Key Points:

• Changpeng Zhao, CEO of Binance, a major cryptocurrency exchange, has raised reservations about fiat-backed stablecoins.
• Zhao believes that cryptocurrency exchanges should be more aggressive in helping to protect stablecoins from possible threats.

Binance’s CEO Changpeng Zhao has some doubts about stablecoins backed by fiat money.

Binance CEO Changpeng Zhao tweeted on March 12 that banks are a concern for fiat-backed stablecoins. “We need stablecoins backed by cryptocurrencies,” other Twitter users said. “Do Kwon truly had the right concept, but failed badly in implementation,” Changpeng Zhao remarked.

Changpeng Zhao, CEO of Binance, a major cryptocurrency exchange, has raised reservations about fiat-backed stablecoins. Zhao argues that banks may represent a risk to stablecoins, which are tethered to fiat currencies like the US dollar or euro. He claims that banks can freeze accounts, which might lead to liquidity concerns for stablecoin producers. Moreover, Zhao has proposed that cryptocurrency exchanges be more aggressive in helping to protect stablecoins from possible threats.

Zhao’s remarks come at a time when stablecoins are gaining popularity in the cryptocurrency industry. These digital assets offer a means to store value without the volatility associated with other cryptocurrencies such as Bitcoin. Yet, there are hazards associated, as with any new technology. Stablecoins have been a popular alternative for many cryptocurrency traders and investors despite these concerns. They let you to transfer cash fast and simply across exchanges without having to convert them back to fiat currencies like USD or EUR. Additionally, stablecoins may be used as collateral for loans or other financial goods in decentralized finance (DeFi) applications.

As more individuals begin to utilize stablecoins, issuers, exchanges, and other stakeholders will need to collaborate to address possible risks and preserve the long-term survival of these digital assets. In these jurisdictions, it appears that the players most likely to profit in this field are regulated financial institutions, i.e., banks. Rather of “destabilizing the old financial system,” crypto is making it substantially more efficient.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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