Binance Suspends Volatile Euro Stablecoin AEUR Trade, Promises To Compensate Losses

Switzerland-based fintech firm Anchored Coins recently issued AEUR.

But Binance is taking issue with that fact that “some users did not realize that AEUR was a stable currency when they purchased it."

As a result, "demand surged in the short term, resulting in price deviations."

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What Happened: Binance disclosed the suspension of AEUR/USDT, BTC/AEUR, ETH/AEUR, and EUR/AEUR spot prices on Dec. 6, to avoid potential losses to other investors.

It also notified users that the exchange would provide reasonable compensation to affected users within three days after the announcement.

Euro-backed stablecoin AEUR experienced an unusual rally of 200%. Some users mistakenly purchased the token even after the halt in trading.

Each AEUR is backed 1:1 with the reserves held exclusively with Swiss FNMA-licensed banks and is currently minted on Ethereum ETH/USD and BNB Chain.

Why Does It Matter: Stablecoins have an associated risk that is not immune to periods of price instability on exchanges. A Moody’s Analytics report in November states that there have been 609 depegs (vs. 707 in 2022) among large-cap fiat-backed stablecoins to date in 2023. For the full year, there were 1,914 depegs up to mid-September 2023 compared to 2,847 depegs in 2022 led by rising interest rates.

Depegs are defined by the price of stablecoins fluctuating by more than 3% against their traditional currency peg.

The U.S. Securities and Exchange Commission is looking out for traditional companies that seek to issue their stablecoins amid a non-transparent regulatory environment in the U.S.

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