Amid the ongoing US crackdown on the stablecoin companies, BitMex’s former CEO proposed the idea of Bitcoin value-backed stablecoin.
Arthur Hayes is the former CEO of the popular Bitcoin exchange “BitMex”. He launched this exchange in 2014 but to this date, the services of this exchange are available in support with multiple crypto assets with leverage upto 100x. In 2021, BitMex’s ex-CEO got into a legal hurdle with the US authorities for violating the Bank Secrecy Act.
Recently BitMex exchange published a new blog post entitled “Dust on Crust” and noted that the crypto sector can use a new concept-based stablecoin called “Satoshi Nakamoto Dollar”.
According to Arthur Satoshi, Nakamoto Dollar (NakaDollar or say NUSD) would be backed by $1 worth of bitcoin and bitcoin derivatives, which would hypothetically provide stability to the token if accepted and used by crypto exchanges.
In short, the proposed new concept for the Naka stablecoin is an algorithmic stablecoin concept, where the crypto sector may face several challenges.
Arthur said that The points of failure in the NakaDollar solution would be centralized crypto derivatives exchanges because NakaDollar will not be decentralized.
Banks, stablecoin & challenges
In the present time, many fiat-pegged as well as algorithmic concept-based stablecoins are running in the crypto sector. All the fiat-pegged stablecoins like USDT, USDC, and BUSD are under very big pressure because of the ongoing US crackdown against crypto companies.
Just a few weeks ago, NewYork financial watchdog NYDFS ordered BUSD stablecoin issuer Paxos Trust to stop minting new BUSD coins.
For 2-3 days, USDC stablecoin has been trading below $1 value, as 25% of its reserves are at risk because of its financial exposure to the struggling banking partner “Silicon Valley Bank”.
In this situation, the majority of crypto proponents are sharing their ideas to overcome such regulatory challenges.