Curve Finance (CRV) considers reducing TUSD exposure following SEC settlement

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Written on Sep 26, 2024

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The protocol mulls removing TrueUSD from backing stablecoin crvUSD.
That comes as the SEC settled charges against TUSD’s issuers for violating securities laws.
The regulator alleged the issuer uses speculative offshore funds to back 99% of TrueUSD reserves.

DEX Curve Finance is assessing a proposal to lessen its dependence on TUSD stablecoin after the US SEC dropped charges against issuers Truecoin and Trusttoken.

The regulator alleged that the entities violated securities policies by using risky offshore funds to back 99% of TrueUSD’s reserves, raising worries about the crvUSD’s stability. This has forced Curve Finance to revise its offering and plans to reduce TUSD stablecoin.

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Curve Finance is considering removing TrueUSD (TUSD) from the collateral list of the stablecoin crvUSD, as the SEC previously accused TrueCoin, the issuer of TUSD, of violating securities laws. Wormhole proposed that the TUSD collateral cap of crvUSD should be reduced to zero to…

6:05 AM · Sep 26, 2024

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Meanwhile, Wormhole Oracle’s proposal aims to reduce the TUSD Pegkeeper debt ceiling to zero, citing solvency and regulation concerns, and PYUSD Pegkeeper to $5M.

This proposal balances the proportional debt ceiling to PegKeeper pool TVL, so reliance on each PegKeeper is suitable for the significance of the respective pool. It also proposed to fully remove exposure to TUSD due to regulatory risk and solvency concerns.

Meanwhile, the SEC confirmed that it settled the charges against Truecoin and Trustcoin for using misleading claims and deceptive practices regarding the TUSD stablecoin.

The watchdog revealed that Trusttoken and Truecoin marketed their investments as trustworthy and secure by stating that TUSD used USD or its equivalent to back its reserves.

However, the complaint shows that Trusttoken and Truecoin used speculative funds to back 99% of TUSD’s reserve.

Trusttoken and Truecoin didn’t deny or consent to the charges but accepted the final ruling, banning them from continued law violations and paying $163,766 (each) in civil penalties.

The PegKeeper pool backing Curve’s crvUSD allows users to mine crvUSD worth up to $10M using TUSD.

Wormhole Oracle proposes reducing this figure to zero. Moreover, it seeks to minimize the crvUSD amount mintable with PYUSD (Paypal’s stablecoin) to $5M from $15M.

However, enthusiasts can mint Curve’s crvUSD against multiple cryptos as collateral, including Wrapped Bitcoin and Ethereum. WBT is the largest crvUSD collateral backing with its $68M in TVL, while wstETH comes second with about $60M in TVL.

Meanwhile, the latest proposal underscores Curve’s dedication to ensuring regulatory compliance.

The proposal seeks to remove TUSD to ensure crvUSD stability as the project explores other stablecoins, with USDM among considerable PegKeeper contenders.

PegKeeper V2 was designed to mitigate exposure to stablecoin depegs. However, it may be prudent to consider completely removing crvUSD exposure to TUSD, which has a notably poor track record on peg stability and transparency standards compared to all other PegKeeper stablecoins. Other PegKeeper contenders many include USDM.

TUSD traded at $0.9982 at press time, below the $1 target, with its market capitalization at $494.77 million.

CRV price outlook

The native token maintained a downward stance after losing 0.80% in the past day. CRV hovers at $0.3049, and the declining daily trading volume indicates emerging bearishness.

However, the brief dip comes after the altcoin gained 10% the previous week.

The alt’s performance mirrored the broad market outlook. The global crypto market capitalization plunged 0.97% over the past 24 hours to $2.23 trillion as Bitcoin failed to steady above $64K.