The invention of Bitcoin (BTC) in 2008 led to the idea of decentralization that has become the motto of the entire cryptocurrency ecosystem. However, it was necessary to involve the regulators and central authorities due to some illegal activities and their negative impact on unsuspecting investors.
The most recent one is the money laundering project created by Tornado Cash, which somehow pointed out some flaws about stablecoins. The mission behind creating the platform was to allow users to conduct private transactions using the Ethereum (ETH) network. However, they had gone outside their jurisdiction.
According to an August 8 New York Times report, Tornado Cash has been implicated in the laundering of more than $7 billion in stolen cryptocurrency.
This led to the US Treasury (US) blacklisting the company. Similarly, Circle, the company behind the stablecoin, USDC, has frozen the accounts of its users associated with the platform.
This action led to talks about the true nature of crypto decentralization. Ryan Adams, crypto investor and CEO of Bankless, referred to the action as an “attack on cryptocurrencies.”
Today the US sanctioned Ethereum addresses associated w/ a privacy service called Tornado cash.
Circle immediately froze the USDC in those accounts. GitHub suspended contributors to Tornado.
If you were waiting for the opening shot of big brother’s assault on crypto this was it
— RYAN SΞAN ADAMS – rsa.eth 🦇🔊 (@RyanSAdams) August 8, 2022
time is over!
In response to the same decision, a researcher at Proximityfi, a DeFi platform based at NEAR, said the crypto community needs a truly decentralized stablecoin.
According to him, the Trio (USDC), Tether (USDT) and Binance USD (BUSD) have outgrown their relevance.
After recent events, it is time the crypto space develops a new stablecoin that is
– 100% decentralized
– censorship resistant
– truly resilient
In this thread I'll explain and summarize one interesting idea to issue a BTC/ETH-backed stablecoin using derivatives contracts 🧵👇
— Res ®️ (@resdegen) August 8, 2022
In the topic, he explained that the top three stablecoins by market cap do not align with the ideas behind decentralization.
Additionally, he mentioned that there were truly decentralized stablecoins that were not popular, including RAI and LUSD, revealing that Ethereum founder Vitaik Buterin was a big fan of the former.
He went even further by suggesting the idea of a stablecoin backed by BTC or ETH for true decentralization.
Interestingly, there have been discussions about USDC replacing USDT. So will this latest proposal end both stablecoins?
At the time of publication, the Tornado cash website has been dropped with its developers kicked off GitHub. However, there was no response from Circle, Tether or Binance Camps regarding the announcement.
In conclusion, Circle’s latest actions may contradict its earlier claims.
On June 18, CEO Jeremy Elair debunked allegations that the company could freeze accounts at any time.
With recent events, it may seem that EthHub founder Anthony Sasano’s concerns were valid. The future will tell us where USDC, BUSD and USDT will go or make improvements.