Binance to Cease Support for BUSD Products
Major cryptocurrency exchange Binance has announced that it will stop supporting all Binance USD (BUSD) products starting on December 15. This decision comes after Paxos halted the minting of new coins. Binance has advised users to withdraw or convert their existing BUSD on the exchange into other assets before December 15. Withdrawals for BUSD will be disabled starting from December 31, and existing balances will automatically be converted into First Digital USD (FDUSD) for certain users.
Background and Regulatory Issues
Binance’s move to wind down services for its native stablecoin follows a gradual plan announced earlier this year. The United States Securities and Exchange Commission had previously suggested that BUSD was an unregistered security in a Wells notice issued to Paxos, the issuer behind the stablecoin. Furthermore, the New York Department of Financial Services ordered Paxos to halt the issuance of BUSD.
Settlement with U.S. Authorities and Market Capitalization
In November, Binance and its former CEO Changpeng Zhao reached a settlement with U.S. authorities, agreeing to pay $4.3 billion. As part of the settlement, Zhao resigned as CEO, and Richard Teng took over as head of regional markets at the exchange. Before August, BUSD was one of the largest stablecoins by market capitalization, but its value has plummeted by more than 92% in the past year.
Hot Take: Binance Ends Support for BUSD Products
Binance’s decision to cease support for BUSD products is a significant development in the crypto industry. The move comes amid regulatory scrutiny and legal challenges faced by the exchange. With the discontinuation of BUSD services, Binance aims to comply with regulatory requirements and ensure the smooth operation of its platform. This decision also highlights the volatility and risks associated with stablecoins, which have faced increasing scrutiny from regulators worldwide. The impact of Binance’s decision on the wider crypto market remains to be seen, but it emphasizes the need for greater regulatory oversight in the industry.
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