Binance, the cryptocurrency exchange, is urging its users to begin transitioning their Binance USD (BUSD) stablecoin assets into other available options, including a recently added stablecoin, as it prepares to phase out support for BUSD.
In a statement released on August 31, Binance verified earlier rumors that it will slowly discontinue support for BUSD by February 2024, aligning with Paxos’ intention to cease BUSD redemptions at that time.
This official announcement marks the first time Binance has publicly addressed the matter after numerous users posted screenshots of a notification on their mobile app regarding the upcoming discontinuation of support. Binance is recommending that users exchange or switch their BUSD holdings for First Digital USD (FDUSD), a stablecoin introduced in June by the Hong Kong-based First Digital Group and initially listed on Binance in late July. Binance has made the process of exchanging BUSD for FDUSD free of charge and removed eight BUSD trading pairs on August 30. The exchange had earlier incentivized the use of the stablecoin by offering zero-fee trading pairs for FDUSD with Bitcoin (BTC) and Ether (ETH).
Binance’s decision to stop supporting BUSD seems to be a response to the US Securities and Exchange Commission’s (SEC) allegation on February 13 that BUSD is an unregistered security, as indicated in a Wells notice sent to Paxos.
On the same day, the New York Department of Financial Services directed Paxos to stop issuing BUSD.
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