{"id":837721,"date":"2025-03-30T08:12:40","date_gmt":"2025-03-30T13:12:40","guid":{"rendered":"https:\/\/newsycanuse.com\/index.php\/2025\/03\/30\/sonic-labs-drop-usd-stablecoin-plan-amid-us-regulations-heres-why\/"},"modified":"2025-03-30T08:12:40","modified_gmt":"2025-03-30T13:12:40","slug":"sonic-labs-drop-usd-stablecoin-plan-amid-us-regulations-heres-why","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2025\/03\/30\/sonic-labs-drop-usd-stablecoin-plan-amid-us-regulations-heres-why\/","title":{"rendered":"Sonic Labs Drop USD Stablecoin Plan Amid US Regulations \u2013 Here\u2019s Why!"},"content":{"rendered":"
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\"Sonic\"<\/figure>\n<\/div>\n
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Sonic Labs has suddenly dropped its plan to launch a USD-backed algorithmic stablecoin, shifting its focus to a UAE dirham-backed alternative. The decision comes as stablecoin regulations tighten in the US, thus, the company is shifting its focus to the United Arab Emirates (UAE) dirham.<\/p>\n

Sonic Labs\u2019 Sudden U-Turn<\/h2>\n

Just a week after hinting at launching a USD-based algorithmic stablecoin with an annual percentage rate (APR) of up to 23%, Sonic Labs has now dropped the plan. Co-founder Andre Cronje confirmed this in a post on X, citing regulatory concerns.<\/p>\n

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We will no longer be releasing a USD based algorithmic stable coin. <\/p>\n

Completely unrelated, we will be releasing a mathematically bound numerical Dirham which is settled and denominated in USD, which is definitely not a USD based algorithmic stable coin. https:\/\/t.co\/NlLsT5IqoE<\/a><\/p>\n<\/div>\n

\u2014 Andre Cronje (@AndreCronjeTech) March 28, 2025<\/a><\/p><\/blockquote><\/div>\n<\/figure>\n

Instead, the company is working on a \u201cmathematically bound numerical Dirham\u201d that will be settled and denominated in USD. However, Cronje insists this is \u201cdefinitely not a USD-based algorithmic stablecoin.\u201d<\/p>\n

The timing of this move aligns with the UAE\u2019s plans to launch its blockchain-based digital dirham in late 2025. Khaled Mohamed Balama, governor of the UAE Central Bank, believes this initiative will strengthen financial stability and curb financial crime. The digital dirham will function alongside physical cash, expanding its use in payment channels.<\/p>\n

Algorithmic Stablecoins Still Face Scrutiny<\/h2>\n

Sonic\u2019s reversal follows skepticism surrounding algorithmic stablecoins, especially after Terra\u2019s infamous collapse in 2022. The $40 billion crash of Terra\u2019s UST stablecoin wiped out billions in investor funds, triggering global concerns about such assets.<\/p>\n

Cronje himself had expressed doubts<\/a> about algorithmic stablecoins in the past, citing personal stress from their risks. \u201cPretty sure our team cracked algo stablecoins today,\u201d he once said, \u201cbut previous cycles gave me PTSD.\u201d<\/p>\n

The European Union has already banned algorithmic stablecoins under its MiCA regulations to prevent another Terra-like disaster. The US is also moving in that direction.<\/p>\n

Stablecoin Regulations Loom in the US<\/h2>\n

The US government is actively working on stablecoin regulations<\/a> through the GENIUS Act and the STABLE Act. Both bills mandate a 1:1 reserve ratio and avoid algorithmic models altogether.\u00a0<\/p>\n

Authorities aim to finalize regulations within two months, with major issuers like Tether, Circle, and Ripple positioning themselves to play a central role.<\/p>\n

Therefore, Sonic Labs is choosing to adapt rather than face uncertain regulatory challenges in the US.<\/p>\n<\/div>\n

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\n Mustafa Mulla<\/p>\n","protected":false},"excerpt":{"rendered":"

Sonic Labs has suddenly dropped its plan to launch a USD-backed algorithmic stablecoin, shifting its focus to a UAE dirham-backed alternative. The decision comes as stablecoin regulations tighten in the US, thus, the company is shifting its focus to the United Arab Emirates (UAE) dirham. Sonic Labs\u2019 Sudden U-Turn Just a week after hinting at<\/p>\n","protected":false},"author":1,"featured_media":837722,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1959,23460],"tags":[],"class_list":{"0":"post-837721","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-sonic","8":"category-stablecoin"},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/837721","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/comments?post=837721"}],"version-history":[{"count":0,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/837721\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media\/837722"}],"wp:attachment":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media?parent=837721"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/categories?post=837721"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/tags?post=837721"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}