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Binance, the world's largest crypto exchange, has announced plans to gradually cease support for its native stablecoin, Binance USD (BUSD), by February 2024. This decision comes after Paxos, the entity responsible for minting new BUSD tokens, received an order from the New York Department of Financial Services (NYDFS) to halt the minting of new BUSD tokens.
The NYDFS's order is indicative of the cautious approach regulatory bodies are adopting towards stablecoins, amidst concerns related to money laundering, consumer protection, and market stability. Following the news of the NYDFS order, the value of BUSD briefly dipped below the $1 mark.
Binance has assured users that BUSD will continue to be backed 1:1 by USD and has provided a clear timeline for the phase-out process. The exchange will delist BUSD as a loanable asset on Monday, September 6, and will suspend withdrawals of Binance-pegged BUSD tokens via BNB Chain, Avalanche, Polygon, and Tron on Tuesday, September 7.
Not all services using Binance's native stablecoin will be affected. Deposits and withdrawals of BUSD tokens through Ethereum will continue, as well as deposits on Polygon BNB Chain Avalanche, and Tron. However, Futures, Earn, Loans, Gift cards, and Pay products will gradually discontinue their use of BUSD starting in the early weeks of September and lasting up to December.
This move comes amidst a series of regulatory challenges faced by Binance across the globe. The crypto exchange is under investigation in multiple jurisdictions including France for potential "aggravated money laundering" and in the United States under accusations of breaching securities laws.
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Despite these challenges, Binance continues to launch new products. This week it introduced a crypto-to-bank payment product named Send Cash in nine Latin American countries.
In 2022's third quarter, Binance made a significant change by delisting all USD Coin (USDC)-denominated trading pairs and initiated auto-conversion of deposits into its native stablecoin BUSD to enhance liquidity for users within its ecosystem. This led to an increase in BUSD's global market share from 21% to 26%. However, by March 2023, BUSD's market share saw a decline of almost 10% from its peak. CoinMarketCap data shows that the 24-hour trading volume of BUSD is around $900 million.
These developments reflect Binance's ongoing efforts to adapt to an evolving regulatory landscape while maintaining its commitment to offering diverse products and services to its users.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
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