Tuesday, February 18, 2025

Curve Finance Ponders Removing TUSD as crvUSD Backing Amid SEC Charges

Originally published on: September 25, 2024

In a surprising turn of events, Curve Finance is contemplating eliminating TrueUSD (TUSD) from the list of tokens that support Curve Stablecoin (crvUSD) following accusations by the United States regulatory body against TrueCoin, the issuer of TUSD, for violating securities laws.

A recent post on Curve’s governance forum raised the proposal to reduce the upper limit on crvUSD’s TUSD backing to zero in order to eliminate exposure to TUSD due to regulatory risks and solvency concerns.

The current liquidity pool allows users to mint up to $10 million worth of crvUSD with TUSD, but the proposal suggests reducing this amount to zero. Additionally, the proposal recommends decreasing the mintable amount of crvUSD with PYUSD, PayPal’s stablecoin, from $15 million to $5 million to mitigate risks associated with the respective pools.

The recent settlement by the US Securities and Exchange Commission (SEC) against TrueCoin and TrustToken for deceptive and unregistered sales of investment contracts involving TrueUSD has shed light on the potentially risky nature of TUSD as a collateral for crvUSD.

With over $68 million in total value locked, WBTC represents the largest portion of crvUSD’s collateral backing, followed by Wrapped Staked Ether (wstETH) at around $60 million in total value locked.

The proposal to remove TUSD as crvUSD backing emphasizes the need for diversity in PegKeepers for stablecoins, underscoring the importance of mitigating risks associated with unstable or dubious tokens.

As Curve Finance weighs its options in response to the SEC charges against TrueCoin and TrustToken, the future of TUSD as part of crvUSD’s backing remains uncertain, signaling potential changes ahead for the decentralized exchange.

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