Binance to Delist and Cease Support for BUSD in 2024
Starting January 2, 2024, at 03:00 (UTC), Binance will disable BUSD withdrawals. Any remaining BUSD balances in users' accounts will be automatically converted to FDUSD at a 1:1 ratio.
What Is BUSD? The Paxos-Issued Stablecoin Backed by Binance
Technically, there are two versions of Binance USD (BUSD):
- ERC-20 BUSD – Issued by Paxos and minted on Ethereum’s ERC-20 protocol.
- BEP-20 BUSD – Offered by Binance through its "Binance-Peg" mechanism, locking Ethereum-based BUSD to maintain a 1:1 USD peg.
While Binance did not directly issue ERC-20 BUSD, it collaborated with Paxos to provide BEP-20 BUSD. Currently, most market references to BUSD pertain to the BEP-20 variant, which once ranked as the third-largest stablecoin by market cap. As of recent data, Binance holds around 144 billion BUSD, accounting for 90% of its total supply.
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Is BUSD Risky? Why Did Paxos End Its Partnership with Binance?
Paxos-issued BUSD was widely regarded as a secure stablecoin due to:
1. Transparency in Issuance
- Paxos is a NYDFS-approved virtual asset company with partnerships extending to PayPal.
- Regular third-party audits verify BUSD’s full asset backing, with reports publicly available.
2. Reserve Composition
As of June 2022, BUSD’s reserves included:
- $105 billion in U.S. Treasury bills
- $61.75 billion in reverse repurchase agreements
- $7.38 billion in cash deposits
Why Did Paxos Terminate Its Agreement with Binance?
In February 2023, the U.S. SEC warned Paxos that BUSD could be classified as an "unregistered security." Though no formal lawsuit followed, Paxos halted new BUSD issuance and ended its collaboration with Binance.
In response, Binance CEO Changpeng Zhao announced plans to phase out BUSD as a primary trading pair, while still honoring existing BUSD holdings.
Potential Consequences of the SEC’s Action Against BUSD
1. Gradual Phase-Out of BUSD
- Binance’s shift away from BUSD, combined with Paxos’ halted issuance, may reduce BUSD’s market presence.
2. SEC’s Broader Crypto Regulation Push
- The SEC’s scrutiny of Paxos may extend to other stablecoin issuers like Tether (USDT).
- This signals tighter U.S. oversight of cryptocurrencies moving forward.
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Impact of BUSD Delisting: Changes in Binance Withdrawals
Previously, Binance users in certain regions relied on BUSD for fiat withdrawals via SWIFT transfers. Post-delisting, users must transition to alternative stablecoins or withdrawal methods.
This underscores that even stablecoins—designed for price stability—are not immune to market shifts.
Analysis: U.S. Government’s Tightening Grip on Crypto
Binance’s August 2023 announcement confirmed BUSD’s full delisting by February 2024, urging users to convert holdings by then.
The SEC’s intervention highlights growing U.S. regulatory pressure on crypto, emphasizing centralized oversight over decentralized ideals.
BUSD’s Successor: Will FDUSD Take Its Place?
Binance now promotes FDUSD, a stablecoin issued by First Digital Labs, as BUSD’s replacement. Key features include:
- Zero-fee BUSD-to-FDUSD conversions
- ERC-20 and BEP-20 compatibility
As a newer stablecoin, FDUSD must prove long-term reliability amid intensifying market competition.
FAQs
1. Can I still withdraw BUSD from Binance after January 2024?
No. After January 2, 2024, BUSD withdrawals will be disabled, and remaining balances will convert to FDUSD.
2. Why did the SEC target BUSD?
The SEC alleges BUSD functions as an unregistered security. Paxos disagreed but terminated issuance to avoid legal risks.
3. What should I do if I still hold BUSD?
Convert BUSD to FDUSD or other assets before February 2024 via Binance’s spot trading or instant swap features.
4. Is FDUSD a safe alternative?
FDUSD is newer and still establishing its track record, but its issuer, First Digital, is a regulated Hong Kong entity.
This analysis reflects market conditions as of 2024. For the latest updates, follow trusted crypto news sources.