Curve founder: Redeemable stablecoins aren't safe from regulatory action

Michael Egorov, founder of decentralized stablecoin-focused exchange Curve, said that redeemable stablecoins aren't safe from regulatory action. The statement followed news that the New York Department of Financial Services forced Paxos to stop issuing the BUSD stablecoin, which is heavily used by crypto exchange Binance.

“No redeemable stablecoin is safe, but I also think that it is unlikely that all of them will be taken down,” he told The Block.

A redeemable stablecoin is one that has underlying collateral for which the stablecoin can be redeemed. Non-redeemable stablecoins may rely on algorithms or other techniques to maintain their parity to the underlying currency.

Egorov said he was surprised the regulator “attacked BUSD like that.” But he noted that regulatory action is always possible against centralized stablecoins and that it’s important to consider this when designing systems that depend on such stablecoins. 

Egorov is currently working on his own decentralized stablecoin, called crvUSD. In October, he released a whitepaper detailing its mechanisms that including LLAMA — its core mechanism that's based on a mathematical design widely used by decentralized exchanges.

While there’s no current release date for the stablecoin, members of Curve’s discord server have used the BUSD news to argue it should arrive swiftly.

“We need crvUSD now - no more playing around,” said one community member.