Binance, a prominent cryptocurrency exchange, has released a statement urging its users to transition their holdings of the Binance USD (BUSD) stablecoin into alternative assets, including a newly introduced stablecoin.

This move comes as part of Binance’s strategy to gradually phase out its support for BUSD, with plans to conclude this process by February 2024.

The decision aligns with Paxos’ intention to cease BUSD redemption around the same time.

This statement marks Binance’s first official acknowledgment of the matter, following reports from several users who shared images of a notification on their mobile app detailing the forthcoming discontinuation of BUSD support.

In an effort to facilitate this transition, Binance is actively encouraging users to engage in trading or converting their BUSD balances into First Digital USD (FDUSD), a stablecoin unveiled by the Hong Kong-based trust company First Digital Group in June. Notably, FDUSD made its debut listing on the Binance exchange in late July.

Binance highlights that conversions and trades involving BUSD and FDUSD will be exempt from fees.

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As of August 30, Binance has also removed eight BUSD trading pairs.

Additionally, Binance had previously incentivized BUSD use by offering fee-free trading pairs for FDUSD paired with Bitcoin and Ether.

The decision to discontinue BUSD support by Binance appears to be a response to actions taken by regulatory authorities.

Specifically, on February 13, the United States Securities and Exchange Commission (SEC) issued a wells notice alleging that BUSD was an unregistered security.

This notice was directed at Paxos, the entity behind BUSD. Concurrently, the New York Department of Financial Services ordered Paxos to halt the issuance of BUSD.

In conclusion, Binance’s recent statement signifies its intention to phase out support for the Binance USD stablecoin (BUSD) by February 2024, aligning with Paxos’ plans.

The exchange encourages users to transition to the First Digital USD (FDUSD) stablecoin and has taken steps to facilitate this change, including fee-free conversions and trades.

This move appears to be influenced by regulatory developments involving BUSD and Paxos.

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