Cash-Backed HUSD Stablecoin Loses Peg, Drops to $0.92
The HUSD stablecoin, which is issued by Stable Universal, has fallen to $0.92, an 8% drop from its planned $1 peg, according to CoinMarketCap prices.
It is trading as low as $0.89 against the USDC stablecoin on decentralized finance (DeFi) protocol Curve Finance. The so-called depeg occurred 16 days after crypto exchange FTX removed HUSD from its basket of support USD stablecoins.
A stablecoin is a cryptocurrency designed to hold its value against another asset. This can be in the form of algorithmic stablecoins or reserve-backed coins, of which HUSD is an example. The stablecoin sector has been under intense regulatory scrutiny this year following the implosion of algorithmic stablecoin TerraUSD (UST), which saw $18.71 billion evaporate alongside the collapse of Terra's LUNA token.
A year ago, HUSD published a breakdown of reserves that showed every issued token was backed by U.S. dollars held in cash in money market accounts. At press time HUSD has a market cap of $149.5 million.
HUSD is issued by Stable Universal and can be redeemed on a 1:1 basis against the U.S. dollar, according to the company's website.
Typically, when redemptions are live the price will gravitate toward the peg because if it's lower, traders can purchase tokens at a discount on an exchange and redeem for a full dollar through the company's website.
Stable Universal did not immediately respond to CoinDesk's request for comment.