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Curve Finance Examining Eliminating TUSD as Collateral Under SEC Review

Curve Finance is considering removing TrueUSD (TUSD) as a collateral option for its stablecoin in reaction to current regulatory worries. This ruling resulted from the SEC’s claims that a dangerous offshore fund, instead of American money, mostly supported TUSD.

Under increasing regulatory scrutiny, well-known distributed exchange (DEX Curve Finance) is looking at removing TrueUSD (TUSD) from its collateral alternatives for the Curve Stablecoin (CRVUSD). This factor results from US Securities and Exchange Commission (SEC) accusations against TrueCoin, the TUSD issuer, for securities law violations.

On September 25, Wormhole—a cross-chain communications system—sent a proposal on Curve’s governance forum. It implies reducing the TUSD collateral limit for crvUSD to zero, therefore eliminating any exposure to TUSD resulting from growing regulatory worries and doubts about its financial viability.

Using TUSD as collateral through the PegKeeper liquidity pool, users can mint crvUSD valued up to $10 million right now. With an eye toward better matching the dependence on each PegKeeper with the value of the individual assets, the plan also suggests lowering the minting cap for PayPal’s stablecoin, PYUSD, from $15 million to $5 million.

The latest activities by the SEC have set the bitcoin community on further alertness. In its lawsuit, the SEC says TrueCoin and TrustToken misled investors by stating TUSD had a full U.S. dollar backing. Rather, it revealed that a speculative offshore fund obtained an astonishing 99% of TUSD’s reserves, casting question on TUSD’s stability as a collateral choice.

Given these results, TrueCoin and TrustToken accepted final decisions that stop them from future breaches of federal securities laws instead than either admitting or rejecting the accusations. Part of the settlement, each will pay $ 163,766 in civil fines.

Currently, crvUSD supports several cryptocurrencies; wrapped bitcoin (WBTC) holds the biggest proportion, worth more than $68 million. Lido Finance’s wrapped staked ether (wst ETH) has total value locked (TVL) of around $60 million.

Given its recent legal issues, this community proposal emphasizes the urgent necessity for more diversification among PegKeepers and the dangers connected with depending mostly on less-known stablecoins like TUSD.

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