DeFi Protocol Curve Finance Weighs Removing TrueUSD (TUSD) From Its crvUSD Stablecoin Collateral Pool
- Linda HamiltonOriginal
- 2024-10-09 09:10:15816browse
The potential decision comes in the wake of recent accusations from the U.S. Securities and Exchange Commission (SEC) against TrueCoin, the issuer of TUSD
DeFi protocol Curve Finance is considering removing TrueUSD (TUSD) from the collateral pool for its crvUSD stablecoin following recent accusations from the U.S. Securities and Exchange Commission (SEC) against TrueCoin, the issuer of TUSD.
According to the SEC's complaint, a significant portion of TUSD's reserves were invested in a "highly speculative and illiquid offshore investment fund" to artificially inflate returns. This raises questions about the stability and transparency of TUSD as a digital asset.
"This case is a prime example of why registration matters, as investors in these products continue to be deprived of the key information needed to make fully informed decisions," said Jorge G. Tenreiro, Acting Chief of the SEC's Crypto Assets & Cyber Unit.
A proposal on Curve's governance forum suggests reducing the upper limit on TUSD backing for crvUSD to zero, effectively eliminating any exposure to TUSD due to the associated regulatory risks and solvency concerns.
Curve's crvUSD stablecoin is backed by a diverse range of cryptocurrency collateral, including ETH and Wrapped Bitcoin (WBTC). Currently, WBTC has the highest exposure among crvUSD's collateral types, with over $68 million in total value locked (TVL).
Wrapped Staked Ether (wstETH), a liquid staking derivative from Lido Finance, follows closely with approximately $60 million in TVL.
"crvUSD is overexposed to minor stablecoins, especially TUSD which has a dubious track record and has recently been charged by the SEC with defrauding investors," the proposal states.
The governance proposal also suggests reducing the amount of crvUSD that can be minted using PayPal's stablecoin, PYUSD. Currently, users can mint up to $15 million worth of crvUSD using PYUSD. The proposal suggests decreasing this to better align the reliance on each PegKeeper with the significance of their respective pools.
Launched in 2018, TrueUSD is among the leading stablecoins, maintaining its peg to the U.S. dollar through corresponding reserves held in escrow accounts. However, the recent SEC accusations regarding its issuers have sparked concerns among users and investors about TUSD's integrity and safety.
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