#Binance , a prominent #cryptocurrency exchange, has made the strategic decision to fully discontinue its loan services, following a period of legal uncertainty in the United States that significantly impacted the prospects of its stablecoin. This development comes over nine months after the aforementioned regulatory instability. As per an official announcement made this week, the provision of Binance USD (BUSD) loans will be halted effective from the 25th of October, 2023. This development represents a further progression towards the eventual cessation of token assistance, as per the scheduled timeline set for February of the forthcoming year.
According to the most recent announcement, the Binance Loans service will be terminating all current #BUSD loans and collateral holdings on the 25th of October. The platform is encouraging customers to promptly return any loans that have been affected prior to 07:59 (UTC) on the designated deadline in order to mitigate any financial losses.
Binance Loans will persist in providing assistance to further stablecoins, such as FDUSD, which is now being advocated as a substitute for BUSD. Previously, individuals had the ability to get loans using their own BUSD tokens, with an estimated yearly interest rate of 3%.
According to a report from Finance Magnates in late August, Binance was making preparations to discontinue its support for BUSD.
Due to the cessation of new BUSD minting by Paxos, Binance intends to eventually withdraw its support for the aforementioned stablecoin on its platform.
The BUSD stablecoin will consistently maintain a 1:1 backing with the United States Dollar (USD), and our organisation is committed to providing support for many additional stablecoins.
This marked the initial instance in which the exchange incentivized its customers to engage in the transfer of the stablecoin to other tokens, such as FDUSD, which was introduced by the Hong Kong-based First Digital Group in June.
First Digital, a trust firm licenced in Hong Kong, has recently introduced a novel stablecoin called #FDUSD , which is tied to the United States Dollar (USD). This stablecoin has been launched on the Binance Smart Chain (#BNB).On June 1, 2023, CZ, the CEO of Binance, tweeted a message.
Despite the promotion of FDUSD over BUSD, the stablecoin that has been in existence for a considerable duration, it continues to exhibit much lower levels of popularity compared to Binance's own token. The present market value of BUSD is at $2.24 billion, whilst FDUSD's market capitalization is comparatively lower at $406 million.
However, upon examining transaction quantities, it becomes evident that the latter option exhibits a higher level of activity. Within a single day, transactions amounting to $1.3 billion are conducted with FDUSD, whereas the daily transaction volume for BUSD is around $500 million.
The primary objective of the exchange is to totally cease support for BUSD by February 2024. Nonetheless, Binance has asserted that the stablecoin BUSD would consistently uphold a fixed exchange rate of 1:1.
The origin of the problem may be traced back to the challenges encountered in the Paxos algorithm.
Binance intends to cease its support for its stablecoin about one year subsequent to cryptocurrency company Paxos being confronted with a legal action by the Securities and Exchange Commission (SEC) for contravening requirements pertaining to safeguarding user interests. Furthermore, the New York Department of Financial Services (NYDFS) initiated a distinct legal action against the corporation.
Earlier today, Paxos made an announcement on the cessation of the production of fresh #BUSD coins, which will take effect on February 21. Please refer to the complete news release issued by Paxos for further details. The provided URL directs to a webpage.The Twitter account associated with Paxos made a post on February 13, 2023.
Consequently, the organisation made the decision to cease the production of additional BUSD tokens. The following figure illustrates the significant impact that this has had on the decrease in the market capitalization of the stablecoin.
Meanwhile, Binance faced other additional regulatory challenges, including difficulties in managing conventional currencies. According to a report by Finance Magnates in late September, Binance has decided to temporarily halt its European Union transactions involving the Euro currency, which were facilitated by Paysafe. In the preceding month of May, there was a suspension of assistance for GBP payments.
