Elixir Stablecoin Collapses After Stream Finance Loss

Stream’s $93 million loss caused deUSD to depeg to just 1.5 ￰0￱ revealed that Stream still owes it around $68 million and holds 90% of the remaining deUSD supply. Meanwhile, Circle called on the US Treasury to ensure equal regulatory treatment for banks, nonbanks, and stablecoin issuers as it implements the GENIUS ￰1￱ law was signed in July, and it aims to create a clear framework for payment stablecoins. However, there is still debate over its enforcement ￰2￱ and other industry players also weighed in, and pushed for balanced ￰3￱ Halts deUSD Support Decentralized finance (DeFi) liquidity provider Elixir suspended support for its synthetic stablecoin, deUSD, after the ripple effects of Stream Finance’s $93 million loss earlier this ￰4￱ fallout caused deUSD to lose its peg dramatically, plummeting to just 1.5 cents on the dollar, according to CoinGecko ￰5￱ announced on X that it already processed redemptions for 80% of deUSD holders before the depeg occurred.

However, the company attributed the collapse primarily to Stream Finance, which it said borrowed deUSD to support its own stablecoin, Staked Stream USD (XUSD). Stream halted withdrawals on Tuesday after revealing that an external fund manager suffered a $93 million loss in net assets, which left the platform with roughly $285 million in debt to multiple ￰6￱ that, around $68 million is reportedly owed to ￰7￱ liquidity crisis created severe knock-on effects throughout the DeFi ecosystem. Stream’s XUSD stablecoin, which relied on deUSD as part of its collateral base, fell as low as $0.10 after the losses were ￰8￱ incident also severely undermined confidence in synthetic stablecoins, particularly in newer entrants like deUSD, which launched in July of 2024 to compete with Ethena Labs’ ￰9￱ claimed that Stream currently holds about 90% of the remaining deUSD supply, which is worth roughly $75 ￰10￱ company also alleged that Stream refused to repay or close its outstanding positions, forcing Elixir to collaborate with other decentralized lending platforms like Euler, Morpho, and Compound to reimburse deUSD holders in ￰11￱ said it still expects these obligations to be honored “1 for 1,” but confirmed it disabled withdrawals to prevent Stream from liquidating its deUSD holdings before settling the ￰12￱ far, Stream Finance has not commented publicly on the issue.

Overall, the situation once again brought to attention the fragility of interconnected DeFi systems, where the collapse of a single protocol can cascade through multiple projects and trigger widespread ￰13￱ Pushes Fair Stablecoin Rules In other stablecoin-related news, Circle urged the US Treasury Department to ensure fair treatment among banks, nonbanks, and stablecoin issuers as officials move forward with implementing the recently signed GENIUS ￰14￱ law was approved in July, and its goal is to establish a comprehensive regulatory framework for payment stablecoins in the United ￰15￱ details of its rollout are still being shaped through public ￰16￱ a submission that was made Tuesday as part of the Treasury’s notice of proposed rulemaking, Circle reiterated its support for the core principles behind the law, including the requirement that all stablecoins be “fully backed with cash and high-quality liquid assets.” However, the company also placed a lot of emphasis on the importance of consistent enforcement and the need for clear consequences for ￰17￱ argued that regulatory standards should apply equally across all types of issuers—bank, nonbank, domestic, and foreign—to prevent regulatory arbitrage and to safeguard ￰18￱ firm explained that a shared supervisory approach with trusted international regulators will help promote competition and maintain market integrity.

Circle’s recommendations were made amid the second round of public comments on how the GENIUS Act should be ￰19￱ the law has been enacted, it will not take effect until either 18 months after its passage or 120 days following the approval of its final regulatory ￰20￱ major players in the crypto industry, including Coinbase, also weighed ￰21￱ asked the Treasury to limit the ban on interest-bearing stablecoins to issuers only, allowing exchanges to continue offering such ￰22￱ suggestion was made after pushback from traditional banking groups concerned around competition from crypto ￰23￱ regulators refine the stablecoin framework, Congress still has a lot of progress to make on the broader digital asset market structure ￰24￱ bipartisan discussions in the Senate, the legislation stalled after a prolonged government shutdown, which is now in its 37th ￰25￱ are still divided over key provisions, though Republican leaders projected that the market structure bill could still be enacted by 2026.