Abstract : HUSD is a stable currency which can be exempted from bankruptcy. Even if the issuer Stable and the fund custodian Paxos go bankrupt, the users can still get the funds safely. HUSD independently anchors the US dollars and becomes a compliance stable currency regulated by the New York Financial Services Department.
On the evening of the 17th, Huobi Global released the latest announcement that the previously launched stable currency HUSD would be upgraded. HUSD will be upgraded from a representative stable currency solution to HUSD Token, which is a stable currency anchoring US dollars independently. This upgrade is the third upgrade of HUSD. The first two upgrades mainly made some dynamic adjustments to the conversion price between HUSD and stable currency as well as the US dollar. This upgrade is to directly anchor the US dollar.
HUSD Token bought insurance for the users
According to the official website of Huobi, HUSD Token is a compliance stable currency issued by Stable Universal, which is invested by Huobi Capital and Paxos Trust. It is 1:1 anchored with US dollars and its US dollar assets are hosted by Paxos Trust.
The Paxos Trust is a New York State-licensed trust company regulated by the New York State Financial Services Authority (NYDFS). In September 2018, the company introduced the regulated stable currency Paxos Standard (PAX). This means that from now on, HUSD has become a compliance currency regulated by the New York Financial Services Department.
The exclusive response from Huobi said that HUSD is a stable currency which can be exempted from bankruptcy. Even if the issuer Stable and the fund custodian Paxos go bankrupt, the users can still get the funds safely. "We provide FDIC insurance for each account."
The CEO of Stable Universal said: "Today's cryptocurrency market requires a safe, trustworthy stable currency that can fully redeem and control risk. We are happy that Huobi can launch the HUSD Token, allowing us to take advantage of its huge customer base to establish liquidity quickly. Combined with the good reputation of Paxos, we can provide the highest level of supervision and protection products."
As a trust company, Paxos will review KYC certification and anti-money laundering compliance for all open accounts and manage Huobi Token's US dollar deposit reserve. And every month, a top audit company audits its assets to ensure that the US dollar reserves match the supply of HUSD Token, but Huobi and Stable have not announced the name of the "top audit company." In addition, Stable Universal will work with third parties to conduct smart contract audits and chain trading monitoring.
In addition to trading HUSD Token in Huobi Global, users can also get HUSD Token in 1:1 ratio through Stable Universal.
The "passive" choice of HUSD
In October last year, Huobi launched the HUSD Stabilization Coin solution. When the users recharge any of the PAX, TUSD, USDC, and GUSD stable currencies on the Coin Exchange, it will be reflected as HUSD in the account; when users withdraw the coin, they can choose to withdraw any stable currency; When there is insufficient stock, they can also choose to withdraw other stable currencies.
Therefore, the HUSD solution of Huobi is not a real stable currency. There is no asset collateral behind it or no scale of issuance. It only provides users with a convenient channel and is also regarded as a “stable currency in stable currency”.
In this solution, GUSD and PAX are stable currency approved by the New York Financial Services Authority. USDC is a stable currency issued based on ERC-20. TUSD is independent of the exchange and is a stable currency managed by an independent third-party trust company. However, there is no USDT that pioneered the stable currency market.
The problem is with the USDT, so people began to distrust it. The USDT is issued by Tether Corporation of the United States. According to the commitment, every time a user buys 1 USDT, Tether will deposit the same amount of US dollar assets as a reserve. But Tether has never disclosed its own reserve account, and people have questioned that Tether is a shell company with no adequate reserves behind it.
The USDT is besieged on all sides, and voice on the market like “USDT is going to collapse” and “USDT is not trustworthy” is endless. "If the USDT is very stable, we have no incentive to change it. Now we are worried about it. At the same time, many users' assets are built on the USDT. In this case, we must give the users a choice." Huobi Global CEO “QiYe” pointed out that this is why many companies make independent stable coins.
Since the beginning of this year, the three major exchanges have entered the stable currency market. On March 28th, OK Group launched the US dollar stable currency OKUSD on its own public chain OKChain; on June 3, OK Group launched the ERC20 standard US dollar stable currency USDK; on June 17, Binance launched BTCB which anchored Bitcoin on its own public chain Binance Chain. Then there was the HUSD Token after the upgrade of Huobi.
Huobi chooses to believe in itself
In the past six months or so, the HUSD solution has been upgraded twice, mainly focusing on adjusting the exchange price of HUSD and stable currency. In the first upgrade in January, the 1:1 rigid exchange ratio between each stable currency and HUSD was canceled, and the HUSD price began to be bound to the legal currency US dollar price. In the second upgrade in June, the exchange price between HUSD and each stale currency continued to be adjusted, which emphasized the weighted average.
What HUSD anchors are several mainstream stable currencies, but the price of these stable currencies is sometimes not so stable. Therefore, it is difficult for Huobi to act as the "channel dealer". Huobi has been seeking to adjust the exchange price of “Huobi – stable currencies anchored – HUSD”. It can be clearly seen from the previous two rounds of upgrade that HUSD is gradually getting out from the intervening of stable currencies and is gradually aligning with the US dollars. This time, Huobi chose to believe in itself - independent of other stable currencies and directly anchoring US dollars.