Global cryptocurrency exchange Binance announced on Oct. 3 that it will end support for Binance Dollar ( BUSD ) lending and staking positions by Oct. 25, 2023. The closure appears to be part of a broader plan to phase out the troubled stablecoin amid increased regulatory scrutiny.

As part of its gradual removal of support for the stablecoin, Binance has urged users to convert their BUSD holdings to First Digital USD (FDUSD). The exchange assured users that BUSD will continue to be backed 1:1 by the U.S. dollar until its backing ends in February 2024.

Regulatory pressure was a big factor in Binance’s decision to phase out BUSD. Earlier this year, BUSD issuer Paxos announced that it would stop issuing stablecoins following scrutiny from U.S. regulators. This summer, the U.S. Securities and Exchange Commission also filed multiple lawsuits against Binance for alleged violations of U.S. securities laws.

Since then, BUSD’s circulating supply has dropped dramatically, from a peak of over $20 billion to around $3 billion.

The exchange also removed BUSD from its Secure Asset Fund for Users (SAFU), claiming that the move was a strategic move to protect users given BUSD’s declining market capitalization.

Under pressure

The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Binance and its CEO Changpeng Zhao, alleging several violations of federal securities laws.

The SEC filing alleges that Binance made billions of dollars by enticing U.S. investors to buy, sell and trade on its unregistered platform. The lawsuit also names BAM Trading Services Inc and BAM Management, with whom Binance partnered in 2019 to launch Binance U.S.

Responding to the SEC’s claim that BNB and BUSD are securities. Binance believes that BNB is a native token designed to create an internal economy and does not represent an investment contract, so it is not a security. #币安  #稳定币