cryptonews.com
Major cryptocurrency exchange Binance announced today in a blog post that it will end support for its Binance USD (BUSD) stablecoin on December 15. The move comes after regulators ordered BUSD issuer Paxos to halt minting of the stablecoin earlier this year.
To aid the transition away from BUSD, Binance will automatically convert any remaining BUSD balances to First Digital USD (FDUSD) stablecoin after December 31. Users are encouraged to withdraw or convert their BUSD holdings prior to the December 15 deadline.
Background on BUSD and Regulatory Action
Launched in 2019, BUSD is a stablecoin pegged to the US dollar. It is issued by Paxos Trust Company and was endorsed by Binance to become a popular stablecoin option on its exchange.
In February 2023 the New York Department of Financial Services (NYDFS) ordered Paxos to stop minting new BUSD, however, citing concerns over its reserves. The regulatory crackdown led Binance to announce it would “gradually” end support for BUSD back in August.
⚠️ BUSD delisting from Binance
if you hold BUSD, get out to be safe
we don’t need another stablecoin depegging pic.twitter.com/VfgFlHvddp— borovik.eth (@3orovik) November 29, 2023
While existing BUSD will be redeemable through February 2024, Binance has set December deadlines to halt trading and withdraw BUSD from its platform.
The discontinuation includes removing BUSD trading pairs and halting deposits on various networks. Binance will also disable BUSD withdrawals starting December 31 at 3:00 AM UTC. At that time, any remaining BUSD balances will be automatically converted to FDUSD.
Transition to FDUSD
FDUSD was launched by FD121 Limited, a subsidiary of Hong Kong-headquartered financial firm First Digital Limited earlier this year.
Binance is attempting to make the transition seamless by enabling 1:1 conversion of BUSD to FDUSD through December 31. The exchange will halt trading BUSD pairs in phases leading up to the December 15 deadline.
After that date, Binance will resume BUSD deposits but automatically convert balances to FDUSD, giving users a limited time to withdraw their BUSD to external wallets.
The BUSD phase-out is part of Binance’s shifting stance towards compliance with global regulators. The newly appointed CEO Richard Teng stated his intention to bring Binance into full regulatory compliance.
Teng replaced founder Changpeng “CZ” Zhao as CEO of Binance’s main entity last week, following CZ’s resignation and guilty plea to violating criminal U.S. anti-money laundering requirements.
Binance hopes to put its regulatory troubles behind it and rebuild trust in key markets such as the United States.
Ending support for BUSD reflects Binance’s evolving stance as pressure mounts from global regulators. The exchange stopped short of immediately converting all BUSD balances to FDUSD, however.
Instead, Binance is giving users time to manage their stablecoin holdings independently. The phased removal of BUSD suggests that Binance hopes to maintain its huge user base by minimizing disruption.