Binance Ends Support for BUSD Stablecoin, Transitioning to FDUSD
Major cryptocurrency exchange Binance has announced that it will no longer support its Binance USD (BUSD) stablecoin starting December 15. This decision comes after regulators ordered BUSD issuer Paxos to stop minting the stablecoin earlier this year.
To facilitate the transition away from BUSD, Binance will automatically convert any remaining BUSD balances to First Digital USD (FDUSD) stablecoin after December 31. Users are encouraged to withdraw or convert their BUSD holdings before the December 15 deadline.
Background on BUSD and Regulatory Action
BUSD was launched in 2019 as a stablecoin pegged to the US dollar. It was issued by Paxos Trust Company and gained popularity on the Binance exchange.
In February 2023, the New York Department of Financial Services (NYDFS) ordered Paxos to halt the minting of new BUSD due to concerns about its reserves. As a result, Binance announced in August that it would gradually end support for BUSD.
While existing BUSD can be redeemed until February 2024, Binance has set deadlines in December to cease trading and withdraw BUSD from its platform.
Transition to FDUSD
FDUSD was launched earlier this year by FD121 Limited, a subsidiary of First Digital Limited based in Hong Kong.
To ensure a smooth transition, Binance allows for a 1:1 conversion of BUSD to FDUSD until December 31. Trading of BUSD pairs will be gradually halted leading up to the December 15 deadline.
After December 15, Binance will resume accepting BUSD deposits but automatically convert them to FDUSD. Users will have a limited time to withdraw their BUSD to external wallets.
Shifting Stance and Regulatory Compliance
The discontinuation of BUSD support reflects Binance’s evolving stance as it aims to comply with global regulators. The newly appointed CEO, Richard Teng, has expressed his commitment to achieving full regulatory compliance.
By ending support for BUSD, Binance hopes to put its regulatory troubles behind it and rebuild trust in important markets like the United States. However, the phased removal of BUSD suggests that Binance wants to minimize disruption and maintain its large user base.
Hot Take: Binance Pivots Away from BUSD, Embracing FDUSD
Binance’s decision to end support for BUSD stablecoin and transition to FDUSD demonstrates the exchange’s commitment to compliance and addressing regulatory concerns. This move follows the order from regulators to halt BUSD minting earlier this year.
By automatically converting remaining BUSD balances to FDUSD, Binance aims to streamline the transition process for users. This decision aligns with the exchange’s efforts to rebuild trust and expand into key markets.
As Binance navigates its regulatory challenges, the phased removal of BUSD indicates a strategy aimed at minimizing disruption for its vast user base. By allowing users time to manage their stablecoin holdings independently, Binance hopes to maintain its position as a leading cryptocurrency exchange.
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