Binance Pushes New Stablecoin as it Confirms Plan to Cease BUSD Support – Binance, the cryptocurrency exchange, is urging its users to begin exchanging their holdings of Binance USD stablecoin for various other assets, including a recently added stablecoin. This move comes as part of their intention to gradually phase out support for BUSD. Binance, in a statement on August 31st, has verified previous conjecture by announcing its intention to progressively withdraw support for BUSD by February 2024.
This aligns with Paxos’ schedule to discontinue BUSD redemption around the same period. The official statement marks Binance’s initial response to the matter, which arose after numerous users shared images of a notification on their mobile app regarding the planned support cessation. Binance’s announcement encourages users to trade or transform their BUSD holdings into First Digital USD (FDUSD), a stablecoin introduced by Hong Kong’s First Digital Group in June.
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This stablecoin had its initial listing on Binance in late July. Binance emphasized that the conversion between BUSD and FDUSD is exempt from fees. Additionally, on August 30th, the exchange removed eight trading pairs involving BUSD. Notably, Binance had earlier motivated users to engage with BUSD by offering fee-free trading pairs for FDUSD paired with Bitcoin (BTC) and Ethereum (ETH).
Binance’s choice to discontinue its support for BUSD seems to be influenced by recent events involving regulatory bodies. Specifically, on February 13th, the United States Securities and Exchange Commission (SEC) issued a wells notice to Paxos, alleging that BUSD was operating as an unregistered security. This development could have prompted Binance to reconsider its stance on BUSD.
Also, on that very day, the New York Department of Financial Services (NYDFS) issued a directive to Paxos, instructing them to cease the issuance of BUSD. This regulatory action likely played a pivotal role in shaping Binance’s decision to wind down its support for BUSD. Binance’s decision to phase out support for BUSD reflects a dynamic interplay of regulatory pressures, market trends, and strategic considerations.
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This move marks a pivotal moment for Binance and its users, as they navigate the evolving landscape of stablecoins and their regulatory implications. As the cryptocurrency ecosystem continues to evolve, market participants will keenly observe how Binance’s decision shapes the trajectory of stablecoin adoption and regulatory compliance.