"Convert BUSD": Binance Ending Support For Stablecoin
The new FDUSD stablecoin appears to be almost identical to BUSD, but does not fall under the purview of the SEC.
Binance will cease supporting all BUSD products by February 2024, according to a support post from the exchange. Users are being encouraged to convert BUSD to other stablecoins as services are mothballed.
The preferred stablecoin is FDUSD, which appears almost identical to BUSD, but does not fall under the authority of the SEC.
Binance has been the target of many regulatory actions in recent months, including by both the CFTC and SEC, as well as a suspected criminal probe by the DOJ.
Its plans to discontinue use of BUSD, its native stablecoin, come after Paxos—the NYDFS-regulated entity responsible for minting USDP and BUSD—was ordered by the SEC to stop minting BUSD back in February.
Binance is now confirming the timeline, and actively urging users to exchange BUSD for other stablecoins, while seeking to reassure them that BUSD will always be backed 1:1 with real dollars.
FDUSD: The New Kid In Town
In the blog post, Binance draws attention to one particular stablecoin available on the platform.
Binance will continue to support multiple stablecoins and digital assets on its platform. Users are encouraged to convert their BUSD assets into other available assets on Binance prior to February 2024. Users may trade their BUSD balances for FDUSD at zero trading fees, or convert their BUSD balances to FDUSD at 1:1.
FDUSD is a new stablecoin that was launched in June by Hong Kong-based trust company First Digital Group, and which listed on Binance in late July.
FDUSD currently has a market cap of under $350 million, and exists on both Ethereum and BNB chains, with plans to launch on other chains in the future.
First Digital Trust Limited is a trust company registered under Hong Kong law. All FDUSD reserves are held in segregated accounts, and are not commingled with other assets held by the firm. Additionally, reserves must also be held in cash or highly liquid assets, meaning FDUSD is 100% backed and can be redeemed for dollars at any time.
This model is very similar to USDP and BUSD—but, as a Hong Kong trust company, First Digital does not come under the purview of the SEC.
In short, the SEC's action appears to have pushed a significant volume of crypto business overseas, forcing the exchange to adopt an alternative that is almost exactly the same, without materially benefiting Binance users in any way.
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