Sonic Labs suddenly abandoned its plan to launch a stable algorithmic supported by the USD, moving to an alternative supported by water. The decision comes as the regulation of the stablecoin is tightening in the United States, so the company focuses on the United Arab Emirates (water) Dirham.
Suddenly Uping of Sonic Labs
Only a week after referring to the launch of a Stablecoin algorithmic based on the USD with an annual percentage rate (APR) up to 23%, Sonic Labs has now lowered the plan. The co-founder Andre Cronje confirmed it in an article on X, citing regulatory concerns.
Instead, the company works on a “dirham digital mathematically linked” which will be settled and labeled in USD. However, Cronje insists that it is “certainly not a stable algorithmic based on the USD”.
The time of this decision aligned on the plans of the United Arab Emirates to launch its Digital Blockchain Dirham at the end of 2025. Khaled Mohamed Balama, governor of the Central Water Bank, estimates that this initiative will strengthen financial stability and limit financial crime. Digital Dirham will operate alongside physical money, expanding its use in payment channels.
Algorithmic stable stables are still facing a meticulous examination
The reversal of Sonic follows skepticism surrounding the algorithmic stablecoins, in particular after the collapse of the sadly famous terra in 2022. The 40 billion dollars crash of the stablecoin of Terra has annihilated billions of investor funds, triggering world concerns concerning these assets.
Air he himself had expressed doubts On the stablescoins algorithmic in the past, citing personal stress of their risks. “Above sure, our team fell in love with the stablescoins of Algo today,” he said one day, “but the previous cycles gave me the SSPT.”
The European Union has already prohibited algorithmic stablecoins under its mica regulations to prevent another terra type disaster. The United States is also moving in this direction.
The regulations of the shock are looming in the United States
The US government is actively working on Stables regulations through the act of genius and the stable act. The two invoices require a 1: 1 reserve report and completely avoid algorithmic models.
The authorities aim to finalize the regulations within two months, with major transmitters like Tether, Circle and Ripple positioning themselves to play a central role.
Therefore, Sonic Labs chooses to adapt rather than to face uncertain regulatory challenges in the United States.