The HUSD (HUSD) stablecoin shows why speculators need to be skeptical of the whole stablecoin model.
The HUSD (HUSD) is a popular ERC-20 (Ethereum) stablecoin that appears on CoinMarketCap’s list of largest stablecoins. On 18 November 2021, HUSD was CoinMarketCap’s 188rd largest cryptocurrency with a Market Capitalization of $284.880 million, a Fully Diluted Market Cap of $284.799 million a 24-Hour Market Volume of $232.242 million, and $1 Coin Price. They based those numbers on a Circulating Supply of 284.827 million HUSD.
Like all stablecoins, HUSD is a cryptocurrency that contains a smart contract that makes payment in a fiat currency when spent. A company called Stable Universal built HUSD. Stable Universal claims HUSD is backed by dollars held by a US Trust. However, HUSD’s website does not identify the trust company.
What Trust Company backs the HUSD stablecoin?
Instead, the website links to Attestation Reports. The Attestation Reports claim to verify Standard Universal’s claims that dollars back HUSD. The 29 October 2021 Attestation Report identifies the Trust Company that holds the dollars as the Huobi Trust Company. I imagine the H in HUSD stands for Huobi.
The Huobi Trust Company is a Nevada licensed retail trust company regulated by the Nevada Financial Institutions Division. I only learned Huobi’s identity by Googling it and going to Huobi’s website. Huobi specializes in building financial solutions for the blockchain such as the HUSD.
Huobi is Huobi Global, a cryptocurrency trading company that began in China in 2013. Notably, Huobi’s website states, “Unfortunately, Huobi Global cannot provide services to US residents. Sorry for having caused you such inconvenience.” Hence, a US company owned by another company that cannot operate in the United States controls the trust accounts that contain HUSD’s fiat currency.
I have to ask why not identify Huobi on the HUSD website? Why not say a US state agency regulates HUSD. The Huobi Trust Company maintains the trust accounts that contain the US dollars pegged to the HUSD stablecoin.
The Attestation Report prepared by the EideBailly accounting firm states HUSD was backed by $492.863 million in Reserve Accounts on 29 October 2021. In comparison, EideBailly estimates there were 406.564 million HUSD tokens in existence on 15 November 2021.
What Value Does the HUSD stablecoin have?
The HUSD token is the basis of the HUSD Ecosystem. The HUSD Ecosystem comprises exchanges and platforms that support HUSD trading and swaps, apps and platforms that accept HUSD, and ERC-20 wallets that accept HUSD.
HUSD (HUSD) has some value. CoinBase gave it a Coin Price of $1, a $2884.9 million market capitalization, a 24-Hour Market Volume of $232.4 million, and a Circulating Supply of 284.8 million HUSD on 15 November 2021. I consider HUSD a stable stablecoin because CoinBase gives it an all-time high of $1.09.
On the service, HUSD appears to be a decent stablecoin. However, details about HUSD are murky. Therefore, I advise speculators and investors to be skeptical of HUSD and other stablecoins. I think the admissions about HUSD show many stablecoins are not trustworthy. Hence, speculators need to be careful about stablecoins because some of their builders do not disclose everything.
Originally published at https://marketmadhouse.com on November 18, 2021.