Binance has officially announced its plans to gradually discontinue support for Binance US Dollar stablecoin (BUSD). The move confirms prior speculations that the exchange would do so following Paxos’s announcement to halt the issuance and redemption of the stablecoin.
In its official statement on August 31, 2023, Binance noted that it would continue to support multiple stablecoins and digital assets on its platform. It encouraged its users to convert their BUSD assets into other available assets before February 2024.
The exchange offered to charge its users zero trading fees to trade or convert their BUSD holdings to FDUSD, another U.S dollar-tied stablecoin. Additionally, users can manually convert BUSD to FDUSD at a fixed 1:1 conversion rate.
FDUSD, introduced in June 2023 by Hong Kong-based trust company First Digital Group, has gained remarkable traction within a short span. It was listed on Binance in late July 2023. Since then, it has swiftly amassed a market capitalization of $347.6 million, making it the 11th most valuable stablecoin available today.
Despite being among the top five stablecoins with a market capitalization exceeding $3 billion, BUSD has faced regulatory scrutiny in the United States. The U.S. Securities and Exchange Commission (SEC) initiated legal proceedings against Paxos Trust Company earlier this year over claims that BUSD is an unregistered security.
This legal conflict prompted Paxos to halt the issuance of new BUSD tokens, casting an air of uncertainty over the stablecoin’s future.
Notably, Binance has been making moves that will gradually phase out BUSD’s presence on its platform. On August 28, 2023, the exchange announced that it would no longer offer 39 liquidity pools to users following a periodic review of its offerings. This decision significantly impacted many BUSD pairs.
Again, the exchange also announced two days later that it had delisted eight BUSD trading pairs. It also disclosed that it would suspend Cross Margin borrowings involving BUSD from September 7, 2023. Additionally, withdrawal of Binance-Peg BUSD tokens on various networks, such as BNB Chain, Avalanche, Polygon, and Tron, will be temporarily suspended starting the same date. However, deposits will remain unaffected for the foreseeable future.
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