Binance to Remove Support for BUSD Stablecoin
In a significant development, Binance has announced that it will no longer support its BUSD stablecoin. The exchange will remove BUSD from both spot and margin trading pairings in a staggered manner, urging users to transfer their BUSD holdings to other assets. This decision was made due to regulatory pressure faced by Paxos, the issuer of BUSD. The US Securities and Exchange Commission (SEC) identified BUSD as a possible unregistered security, and under the directive of the New York Department of Financial Services (NYDFS), Paxos stopped issuing BUSD. However, Paxos guarantees that BUSD will be redeemable through at least February 2024 and fully backed by the US dollar.
Regulatory Impact on BUSD and Binance: SEC Actions and NYDFS Directive
The regulatory actions taken by the SEC in February had a direct impact on the decision to remove support for BUSD. The NYDFS directive also played a role in Paxos ceasing the issuance of BUSD. Binance’s move is a response to increased regulatory scrutiny. Spot trading pairings containing BUSD will be delisted between December 11 and December 15. Futures delistings will occur on a different timeline, while spot-taking orders and Spot Trading Bot services will end accordingly. From December 31 onwards, any remaining BUSD will be automatically converted into FDUSD, except for users in specific countries.
BUSD: From Peak Valuation to 92% Decrease in a Year
Prior to facing regulatory issues, BUSD was one of the most valuable stablecoins with a market valuation peaking at over $23.3 billion in November 2022. However, it has since experienced a significant decline, with its market valuation dropping by nearly 92% to around $1.7 billion in just a year. Binance’s Earn, Card, Pay, and Gift Card services will also undergo modifications alongside this change.
US Authorities’ Actions Against Binance
US authorities have been taking strong measures against major cryptocurrency companies like Binance. After admitting guilt for breaking the Bank Secrecy Act, Binance’s CEO, Changpeng Zhao, resigned and the company agreed to pay $4 billion in fines. Richard Teng has assumed the CEO position following Zhao’s resignation, highlighting Binance’s commitment to compliance and adaptation. Meanwhile, Paxos has announced plans to collaborate with PayPal in launching PYUSD, its own stablecoin backed by the US dollar.
Hot Take: Binance’s Decision Reflects Regulatory Pressure
Binance’s decision to remove support for BUSD is a direct response to regulatory pressure and scrutiny from the SEC and NYDFS. The exchange aims to comply with regulations and adapt to the evolving cryptocurrency landscape. This move will require users to transition their BUSD holdings to other assets as trading pairings containing BUSD will be delisted. Despite the regulatory challenges faced by BUSD, Paxos ensures that it remains redeemable and fully backed by the US dollar until at least February 2024. This decision also marks a significant decline for BUSD, which experienced a 92% decrease in market valuation within a year.
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