TLDR
Binance will end support to BUSD on 15 Dec 2023.
BUSD with Binance
- Users can convert their BUSD into other assets before 2023-12-15, remaining BUSD balance will be automatically converted to FDUSD.
- Withdrawal of BUSD will be unavailable after 2024-01-02 03:00 (UTC) but users can still deposit BUSD and manually convert into FDUSD.BUSD with Paxos
BUSD holders can redeem funds in US dollars or convert to Pax dollar (USDP) through Paxos until February 2024.
What is BUSD
BUSD is a USD backed Stablecoin issued and owned by Paxos, a NY based blockchain company, while Binance licensed its brand.
BUSD was first issued in September 2019 and at one point it was ranked the third among Stablecoins after USDT and USDC.
According to CoinMarketCap, BUSD’s Marketcap topped at 23B in December 2022 and as of today its at 1.4B.
Scrutiny from NYDFS and SEC
Towards Paxos
In February, SEC issued a Wells Notice to Paxos stating that SEC is considering action alleging that BUSD is an unregistered security.
PS. Wells Notice is a notice from SEC informing the recipient that the agency is planning on bringing enforcement actions against the recipient.
In the same month, the Department of Financial Services (NYDFS) supervises and regulates activities of financial institutions, ordered Paxos to cease issuing BUSD.
Towards Binance
A few months after Paxos receiving actions towards it, Binance and its founder also got charged with 13 offences in June including operating unregistered securities exchange and failing to restrict US investors in accessing the platform.
Paxos and Binance’s Responses
Upon receiving the two actions from NYDFS and SEC, Paxos has ceased the issuance of BUSD as effective on February 21, however it will continue to manage BUSD reserves.
Binance announced that it will no longer be supporting BUSD effective on 15 December. It will be removing BUSD from spot trading and margin trading as well as encouraging users to convert BUSD into other assets. From 31 December, users’ remaining BUSD balance will be automatically converted into FDUSD.
What does it mean for current BUSD holders?
BUSD holders can redeem their BUSD in US dollars or convert to Pax dollar (USDP) through Paxos until at least February 2024.
For Binance users, they can convert their BUSD into other assets before 2023-12-15, remaining BUSD balance will be automatically converted to FDUSD after that. Withdrawal of BUSD will be unavailable after 2024-01-02 03:00 (UTC) but users can still deposit BUSD and manually convert it into FDUSD.
The next rising comer
Along with the fall of a significant Stablecoin, it spaces out new opportunity for another Stablecoin to emerge. One of which that has been rising rapidly is First Digital USD (FDUSD), ranking #6 among Stablecoins with Marketcap surpassing $1 billion earlier this month.
FDUSD was first issued in June 2023, by FD121 Limited (a subsidiary of First Digital Trust Limted - a custodian based in Hong Kong). FDUSD is currently issued on BNB and Ethereum chain, but with plans of expanding to other blockchain networks in the near future.
Binance announced its support for FDUSD in July, urging users to convert to FDUSD.
Despite the growing market capitalisation and support from Binance, FDUSD’s current presence is still limited to five exchanges. Therefore, it remains uncertain whether FDUSD will reach the same level of adoption as BUSD and be establish itself as a long term Stablecoin.