Binance, the world-renowned cryptocurrency exchange, has made a significant announcement that has sent ripples throughout the crypto community. In a recent blog post, the exchange declared its intention to cease support for the Binance USD (BUSD) stablecoin.
This decision comes on the heels of Paxos’ move to halt the production of new BUSD coins. By February 2024, Binance users must transition away from BUSD, prompting them to explore other stablecoin options or digital assets.
For those holding BUSD, the clock is ticking. Binance has set a clear timeline for the phasing out of BUSD support. Starting from 06:00 UTC on September 7, 2023, cross-margin BUSD borrowings will be suspended. Fast-forward to October 19, 2023, at 06:00 UTC, and the platform will no longer accept new BUSD collateral.
Moreover, Binance-Peg BUSD withdrawals will be halted across all networks from September 7th, 2023, at 00:00 UTC. However, there’s a silver lining for some, as BUSD (ERC-20) transactions will continue on the Ethereum network until further notice.
While the specifics regarding delisting perpetual contracts with a BUSD margin are still under wraps, Binance has assured its users that they can convert their BUSD futures holdings to other supported assets through the Futures Asset Conversion feature.
As Binance phases out BUSD, it’s spotlighting another stablecoin, First Digital USD (FDUSD). Launched in June by the First Digital Group based in Hong Kong, FDUSD debuted on the Binance exchange in late July. Binance is actively promoting its users to swap their BUSD for FDUSD, offering incentives like a 1:1 BUSD/FDUSD exchange rate and commission-free trading of BUSD for FDUSD.
The underlying reason for Binance’s decision can be traced back to Paxos. On February 13, Paxos announced the termination of its partnership with Binance concerning the USD-backed stablecoin BUSD. Following regulatory approval from the New York Department of Financial Services (NYDFS), Paxos ceased issuing new BUSD tokens on February 21.
However, Paxos Trust Company has assured that all existing BUSD tokens will remain fully backed and redeemable until at least February 2024. During this period, users can either trade their BUSD for USD or opt for the Pax Dollar (USDP), another stablecoin offering from Paxos.