Binance, the world's largest cryptocurrency exchange, has announced its decision to discontinue support for BUSD, its stablecoin pegged to the US dollar, in a statement released on August 31, 2023. This move is in response to mounting regulatory challenges faced by Binance in several countries that question the legality and security of its operations.
What is BUSD?
BUSD (Binance USD) was launched in September 2019 through a partnership between Binance and Paxos, a New York-based blockchain and finance company. It maintains a 1:1 exchange rate with the US dollar, providing users with a stable cryptocurrency to transact with while avoiding the volatility of other digital currencies.
BUSD is backed by reserves of US dollars held in segregated accounts, subject to monthly audits by an independent firm. Additionally, it is regulated by the New York State Department of Financial Services (NYDFS), which grants it a virtual currency license, offering users a higher level of trust and security compared to other stablecoins.
Users can acquire BUSD by exchanging other cryptocurrencies or fiat currency on various exchange platforms, including Binance, Coinbase, Crypto.com, and more. BUSD has utility beyond simple transactions, as it can be used for paying transaction fees, trading for other tokens, earning interest, participating in reward programs, and accessing various services on the Binance network.
Why is Binance Ending BUSD Support?
Binance's decision to terminate support for BUSD was outlined in its August 31, 2023 statement, which includes the following actions:
Starting from September 30, 2023, users will be unable to deposit or withdraw BUSD from their Binance accounts.
From October 31, 2023, BUSD trading on the Binance exchange will be discontinued.
From November 30, 2023, users will no longer be able to send or receive BUSD to or from their Binance addresses.
Binance advises users to convert their BUSD holdings to other currencies or withdraw them to alternative platforms before these deadlines. BUSD will gradually be removed as a trading pair with other cryptocurrencies in Binance's Spot and Margin wallets. Additionally, Binance will cease offering BUSD on its Binance Pay and gift card services.
This decision is driven by the escalating regulatory pressures facing Binance in several countries, where concerns over compliance with financial regulations and anti-money laundering rules have led to bans or restrictions on Binance's services. By discontinuing BUSD support, Binance aims to reduce its regulatory exposure, mitigate potential penalties or legal actions, and protect its users and partners from potential disruptions or losses.
Alternatives to BUSD
Users seeking to continue using a US dollar-pegged stablecoin have several alternatives available, including:
USDT (Tether): The world's oldest and most widely used stablecoin, with a market capitalization exceeding $68 billion. USDT maintains a 1:1 exchange rate with the US dollar and is backed by asset reserves, including cash and cash equivalents. It is available on various blockchain networks and can be traded on most cryptocurrency platforms, including Binance.
USDC (USD Coin): Launched in 2018 by the Centre consortium, a collaboration between Coinbase and Circle. USDC also maintains a 1:1 exchange rate with the US dollar and is backed by reserves held in regulated bank accounts, subject to monthly audits by an independent firm. Like USDT, USDC is accessible on multiple blockchain networks and is tradable on many cryptocurrency platforms, including Binance.
In conclusion, Binance's decision to end support for BUSD stems from the growing regulatory challenges it faces in multiple countries. By taking this step, Binance aims to minimize regulatory risks, safeguard its users and partners, and ensure uninterrupted operations. Users interested in stablecoins pegged to the US dollar can explore alternatives like USDT and USDC, which offer diverse features and benefits and are widely available on various cryptocurrency platforms, including Binance.
