Curve Considers Removing TUSD from crvUSD Collateral Amid SEC Scrutiny

TruCoin, TUSDs issur, fcs SEC llgtions of frudulnt nd unrgistrd sls, rising concrns bout its solvncy nd rgultory complinc.
Curv Finncs crvUSD stblcoin is ovrxposd to TUSD, significnt portion of its colltrl bcking, rising concrns following th SEC chrgs.
Wormhol proposs rducing nd vntully liminting TUSDs bcking for crvUSD to mitigt rgultory risks nd potntil solvncy issus.

Curv Finnc, prominnt dcntrlizd xchng (DEX) rcognizd for its fficint stblcoin trding, is fcing possibl disruption in th colltrl supporting its crvUSD stblcoin. Th sitution stms from rcnt ctions tkn by th U.S. Scuritis nd Exchng Commission (SEC) ginst TruUSD (TUSD), on of th ssts usd s colltrl for crting crvUSD.

On Sptmbr 24th, th SEC sttld with TruCoin, th issur of TUSD, which risd concrns bout th stbility of stblcoin. Th SEC llgd tht TruCoin nd its prnt compny TrustTokn wr involvd in frudulnt nd unuthorizd sls of invstmnt contrcts linkd to TruUSD.

Notbly, th rgultors complint clims tht TruCoin flsly rprsntd tht TUSD ws fully bckd by U.S. dollrs or quivlnt ssts. Howvr, substntil prt (rportdly 99%) of its rsrvs ws invstd in risky offshor fund. This hs sprkd doubts bout th coins tru vlu.

Wormhole Proposes Zero TUSD Backing

This dvlopmnt hs risd concrns mong mmbrs of th Curv community. On Sptmbr 25th, proposl pprd on Curvs govrnnc forum from Wormhol, cross-chin mssging protocol, suggesting lowering the upper limit of crvUSDs backing to zero to eliminate exposure to TUSD, addressing both regulatory risks and concerns regarding solvency.

Currntly, th PgKpr systmth mchnism mnging crvUSDs liquidity poolsllows usrs to mint up to $10 million worth of crvUSD using TUSD. Wormhols proposl proposs liminting this option ntirly.

Th impct of th current sitution xtnds byond just on stblcoin. Th proposl lso suggsts lowring th crvUSD dbt ciling for PyPls stblcoin (PYUSD) from $15 million to $5 million. This chng highlights th incrsd PgKpr ciling to TVL (Totl Vlu Lockd) rtio for both PYUSD nd TUSD, s wll s thir stgnnt TVL growth.

Source: Curve.fi

Whil crvUSD offrs usrs th flxibility to mint th stblcoin using vrious cryptocurrncis s colltrl, th currnt composition riss concrns bout divrsifiction. Wrppd Bitcoin (WBTC) currntly holds th dominnt position, ccounting for ovr $68 million in TVL, followd by Lido Finncs wstETH (liquid stking drivtiv) t round $60 million.

Th proposl highlights this lck of divrsifiction, stting, crvUSD is ovrxposd to minor stblcoins, spcilly TUSD which hs dubious trck rcord nd hs rcntly bn chrgd by th SEC with dfruding invstors. It mphsizs th nd for mor robust nd divrs st of PgKprs but cknowldgs tht this is sprt discussion.

Th community vot on th proposl will dtrmin crvUSDs futur composition. A dcisiv mov wy from TruUSD could solidify Curvs commitmnt to usr trust nd rgultory complinc. Howvr, it lso ncssitts rssssmnt of th idl blnc btwn stblcoin divrsity nd individul colltrl risk profils within th PgKpr systm. Curv fcs crucil dcision tht will impct th stbility nd risk profil of its flgship stblcoin, crvUSD.

Text source: TronWeekly

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