Binance, the world's largest cryptocurrency exchange, announced its plan to end support for BUSD, its stablecoin pegged to the US dollar, in a statement published on August 31, 2023. This decision is due to the increasing regulatory pressures it faces. Binance in several countries, which question the legality and security of its operations.

What is BUSD?

BUSD (Binance USD) is a cryptocurrency that was launched in September 2019 as part of a partnership between Binance and Paxos, a New York-based blockchain and finance company2. BUSD has a 1:1 exchange rate with the US dollar, meaning each BUSD is equivalent to one dollar. This allows users to transact with a stablecoin and avoid the volatility of other cryptocurrencies.

BUSD is backed by reserves of US dollars that are stored in segregated accounts and audited monthly by an independent firm. Additionally, BUSD is regulated by the New York State Department of Financial Services (NYDFS), which grants it a license to operate as a virtual currency. This gives BUSD a higher level of trust and security than other stablecoins.

BUSD can be purchased with other cryptocurrencies or fiat money on different exchange platforms, such as Binance, Coinbase, Crypto.com, Gemini, etc. It can also be used to pay transaction fees, exchange for other tokens, earn interest, participate in reward programs, and access other services on the Binance network.

Why did Binance stop supporting BUSD?

Binance announced its plan to stop supporting BUSD in a statement published on August 31, 2023. According to the statement, Binance will take the following actions:

  • Starting September 30, 2023, users will not be able to deposit or withdraw BUSD from their Binance accounts.

  • Starting October 31, 2023, users will not be able to buy or sell BUSD on the Binance exchange.

  • Starting November 30, 2023, users will not be able to send or receive BUSD from their Binance addresses.

Binance urged users to convert their BUSD to other currencies or withdraw them to other platforms before the deadlines. Additionally, Binance indicated that it will gradually eliminate BUSD as a pair for exchanges with other cryptocurrencies in its Spot and Margin wallets. It will also stop offering BUSD on Binance Pay and gift cards.

The reason behind this decision is the increasing regulatory pressure that Binance faces in several countries, which question the legality and security of its operations. Some countries have banned or restricted access to Binance on the grounds that it does not comply with financial and anti-money laundering regulations. Other countries have warned users about the risks associated with using Binance due to its lack of licensing or oversight.

By ceasing support for BUSD, Binance seeks to reduce its regulatory exposure and avoid potential sanctions or lawsuits. It also seeks to protect its users and partners against possible inconveniences or losses. However, this decision also implies a loss of market and competitiveness for Binance, since BUSD is a popular stablecoin and in demand by users.

What alternatives are there to BUSD?

Users who want to continue using a stablecoin pegged to the US dollar have several options available on the market. Some of them are:

  • USDT (Tether): It is the oldest and most used stablecoin in the world, with a market capitalization of more than $68 billion. USDT has a 1:1 exchange rate with the US dollar and is backed by asset reserves including cash, cash equivalents and other assets. USDT is available on various blockchain networks, such as Ethereum, Tron, Solana, etc. USDT can be bought, sold and traded on most cryptocurrency platforms, including Binance.

  • USDC (USD Coin): is a stablecoin launched in 2018 by the Center consortium, formed by Coinbase and Circle. USDC has a 1:1 exchange rate with the US dollar and is backed by reserves of US dollars that are stored in regulated bank accounts audited monthly by an independent firm. USDC is available on various blockchain networks, such as Ethereum, Algorand, Stellar, etc. USDC can be bought, sold, and traded on many cryptocurrency platforms, including Binance.

  • DAI (Dai Stablecoin): is a stablecoin launched in 2017 by MakerDAO, a decentralized autonomous organization (DAO) that operates on the Ethereum network. DAI has a 1:1 exchange rate with the US dollar and is backed by collateral from other cryptocurrencies that are deposited in smart contracts called Vaults. DAI dynamically adjusts to market conditions to maintain its stability through incentive and governance mechanisms. DAI can be bought, sold and traded on various cryptocurrency platforms, including Binance.