[NEWS] Binance to end support for stablecoin BUSD on the 15th

On the 29th of last month, major cryptocurrency exchange Binance announced that it would completely end support for the stablecoin Binance USD (BUSD) on the 15th of this month.

Binance had announced in August of this year that it would gradually end support for Binance USD.

In February, the NYDFS (New York State Department of Financial Services) ordered Paxos, the issuer of Binance USD, to halt new issuance of the currency.

Paxos provides custody services for crypto assets and issues two types of stablecoins: Binance USD and Pax Dollar (USDP).

Binance USD was once the third largest stablecoin in terms of market capitalization after Tether (USDT) and USD Coin (USDC). It was jointly developed by Binance and Paxos and approved by the NYDFS.

Binance USD's reserve assets were secured by fiat dollars and U.S. Treasury bonds, and customer funds were always redeemable at a 1:1 ratio. However, the SEC (U.S. Securities and Exchange Commission) claimed that "Binance USD is an unregistered security" and issued a warning letter, the "Wells Notice," for suspected violations of investor protection. The NYDFS also ordered the suspension of new issuance of Binance USD due to concerns about reserve funds.

Automatic conversion to FDUSD after December 31

Binance encourages customers to exchange Binance USD for fiat currency or another currency. After December 31 of this year, Binance USD balances will be automatically converted to FDUSD (First Digital USD). FDUSD is issued by FD121Limited, a subsidiary of First Digital Limited, based in Hong Kong.

Existing Binance USD can be redeemed until February 2024, but trading on the exchange itself will be suspended. Binance will also disable withdrawals of Binance USD from 3 a.m. on December 31.

The phasing out of Binance USD can be seen as part of the strengthening of regulations on Binance. Binance's new CEO, Richard Teng, has stated his intention to thoroughly comply with regulations going forward.

Binance appears to be aiming to resolve its regulatory issues and rebuild trust in the U.S. The end of support for Binance USD can also be seen as a sign of the company's response to the crackdown by regulators.

Reference: Announcement
Image: Shutterstock

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