Binance to discontinue BUSD support; recommends this alternative
- Binance encouraged its users to convert their BUSD holdings into other available assets.
- Regulatory developments seem to have partly motivated the move.
Binance [BNB] has urged users to transition from its Binance USD [BUSD] stablecoin, encouraging them to explore alternatives. The exchange’s move followed Paxos’ announcement that it intends to cease support for BUSD by February 2024.
Binance’s decision aligned with Paxos’ plan and aims to address concerns regarding the regulatory status of BUSD.
In an official statement released on 31 August, Binance confirmed the gradual discontinuation of BUSD support. While users had observed a pop-up notification about the impending support discontinuation on their mobile app, Binance’s recent statement represents its formal acknowledgment of the matter.
Binance’s strategy involves encouraging its users to take action, allowing them to convert their BUSD holdings into other available assets. Particularly, the exchange highlights the option of transitioning to First Digital USD [FDUSD].
FUSD is a stablecoin introduced by the Hong Kong-based trust company First Digital Group. It was listed on Binance in late July and has since garnered attention.
Users encouraged to embrace alternatives
The transition from BUSD to FDUSD is accompanied by benefits. Binance emphasizes that users engaging in BUSD to FDUSD trades and conversions would not incur any fees.
To facilitate this shift, Binance delisted eight BUSD trading pairs on 30 August, further incentivizing users to explore the alternatives.
Regulatory developments seem to have partly motivated the move to phase out BUSD support. Notably, on 13 February, the United States Securities and Exchange Commission (SEC) raised concerns over BUSD’s regulatory status.
The SEC alleged that it qualified as an unregistered security. This action came in the form of a Wells Notice issued to Paxos, the entity behind BUSD.
Simultaneously, the New York Department of Financial Services directed Paxos to halt the issuance of BUSD, marking a significant regulatory shift.