Binance to End Support for BUSD
Binance discontinues support for BUSD stablecoin, advises users to transition assets by Feb 2024. Conversion to FDUSD offered at no cost.
Binance has recently declared a phased discontinuation of support for its in-house stablecoin, BUSD. The leading global exchange plans to eliminate this stablecoin from both spot and margin trading pairs. Users have been advised to transition their BUSD assets into other supported currencies on the platform by February 2024.
As Paxos has halted minting of new BUSD, #Binance will now gradually remove support for the stablecoin on our platform.
BUSD will always remain backed 1:1 by USD, and we continue to support a wide range of other stablecoins.
Find more details below. — Binance (@binance) August 31, 2023
Binance plans to incrementally remove BUSD from several of its services, including:
- Spot and Margin Trading
- Futures Market
- Payment Solutions like Binance Pay
- Gift Card Offerings
- Lending Services
- Earn Program
The immediate reason for Binance's decision is tied to Paxos, the issuer of BUSD, ceasing the minting of new BUSD tokens. This move by Paxos was prompted by a Wells Notice from the Securities and Exchange Commission (SEC), a warning of possible enforcement action.
Interestingly, not all services using BUSD will be affected. Deposits and withdrawals of BUSD tokens through networks like Ethereum, Polygon, BNB Chain, Avalanche, and Tron will continue.
Conversion to FDUSD
Binance encourages users to convert their BUSD holdings to First Digital USD (FDUSD) at 1:1, a new stablecoin backed by Hong Kong-based First Digital Trust Limited. This conversion will be offered at no cost and must be completed by February 2024.
Since its launch, FDUSD has rapidly gained market capitalization, going from around $10 million in July to $352.6 million today. This could make it a viable alternative for those looking to move away from BUSD.
FDUSD Marketcap Growth (Source: CoinMarketCap)
BUSD's market share had increased from 21% to 26% when compared against other major stablecoins like USDT and USDC. However, by March 2023, it had dropped nearly 10% from its peak. USDT is the largest stablecoin with a market domination of 66.15%. In comparison, FDUSD has a dominance of 0.28%.
USDT Marketcap Dominance (Source: DefiLlama)
The exchange is currently facing multiple investigations worldwide, including allegations of breaking securities laws in the United States and accusations of money laundering in France. These challenges could be a contributing factor to the decision to phase out BUSD.
In addition to grappling with SEC-related issues, Binance has severed its collaborative crypto card agreements with Mastercard and Visa in specific regions, including Latin America and the Middle East.
Despite these challenges, the company isn't slowing down on innovation. Just this week, Binance introduced a new service called Send Cash, designed to facilitate crypto-to-bank transactions in nine countries across Latin America.