Curve Finance May Cut TrueUSD as crvUSD Collateral

A proposal on Curve Finance is aiming to eliminate TrueUSD (TUSD) as collateral for its crvUSD stablecoin due to worries about TUSD’s stability and regulatory concerns.

Submitted by a user named “WormholeOracle,” the proposal suggests setting the TUSD collateral limit to zero and reducing the minting capacity of crvUSD linked to PayPal’s PYUSD from $15 million to $5 million.

The rationale behind this move is rooted in TUSD’s recent troubles, including SEC allegations of fraud against its issuer, TrueCoin, for not fully backing the stablecoin with U.S. dollars.

This proposed change seeks to diversify crvUSD’s collateral and lessen dependence on assets viewed as risky.

This initiative highlights the challenges that decentralized finance protocols face in maintaining regulatory compliance and market stability. If approved, it could reshape TUSD’s role in the DeFi ecosystem and influence how other stablecoin projects manage collateral.

Earlier this year, TUSD saw a notable depegging, dropping to $0.97 amidst significant net outflows on Binance, which further eroded confidence in the stablecoin. Following a hacking incident, TUSD fell even lower to $0.985.