Binance converts its BUSD in SAFU funds to other stablecoins
- Paxos-issued BUSD exists from Binance’s SAFU funds as a move made in users’ interest
- The stablecoin was previously taken out from Industry Recovery Initiative Funds
Binance – the world’s largest cryptocurrency exchange – announced that it has converted the BUSD stablecoin it its SAFU fund. The Secure Asset Fund for Users (SAFU) was launched by the exchange back in 2018 as an emergency insurance fund in order to protect users. The fund initially consisted of Bitcoin (BTC), Binance USD (BUSD), and Binance Coin (BNB).
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BUSD dropped amidst Paxos SEC face off
However, given the latest developments with BUSD issuer Paxos – Binance has opted to hold other stablecoins instead of BUSD. The latest announcement stated that the exchange would swap BUSD for TrueUSD (TUSD) and Tether (USDT). The announcement further said,
“This swap is to ensure that assets in SAFU continue to protect users in the long term as the BUSD market capitalization continues to decrease over time. This change will be of no impact on users, and these funds will continue to be on publicly verifiable addresses.”
Notably, the update comes days after Changpeng Zhao aka CZ announced that the exchange would swap out BUSD from the Industry Recovery Initiative funds. The stablecoin was swapped for the king coin – Bitcoin (BTC), Ethereum (ETH), and Binance Coin (BNB). Even Coinbase – a leading American crypto exchange – ended its support for BUSD by suspending its trading services. In a Tweet, he said,
“Given the changes in stable coins and banks, #Binance will convert the remaining of the $1 billion Industry Recovery Initiative funds from BUSD to native crypto, including #BTC, #BNB and ETH. Some fund movements will occur on-chain. Transparency.”
BUSD’s situation in the market started to turn south ever since it fell under the radar of the United States Securities and Exchanges Commission (SEC). Moreover, Paxos halted minting the stablecoin on February 21 under the orders of New York regulators. And, the reason was cited to be “several unresolved issued related to Paxos’ oversight of its relationship with Binance”. This resulted in the stablecoin-issuer ending its relationship with the global crypto exchange.
Additionally, Paxos CEO stated that the firm is ready to take matters to court in case the stablecoin was labeled as a security by the commission. Currently, however, the firm is engaging in “constructive discussions” with the SEC.