Binance will cease support for Binance USD (BUSD) due to Paxos halting minting, prompting BUSD holders to convert to the new stablecoin FDUSD, impacting various financial instruments.
Key Points
- Binance discontinues support for Binance USD (BUSD) by Feb 2024 due to Paxos halting BUSD minting.
- BUSD holders urged to convert assets to other supported digital assets, offering BUSD to FDUSD conversion at 1:1 rate.
- New stablecoin First Digital USD (FDUSD) replaces BUSD on Binance, backed by cash equivalents, compatible with Web3.
- Timeline includes BUSD token withdrawals, borrowings suspension, perpetual contract phase-out, affecting various financial instruments.
Binance, one of the leading cryptocurrency exchanges, has announced that it will no longer support Binance USD (BUSD) by February 2024.
This decision comes after Paxos, the issuer of BUSD, decided to halt new minting of the stablecoin. As a result, various Binance services, including spot and margin trading, futures, and loans, will be affected.
As Paxos has halted minting of new BUSD, #Binance will now gradually remove support for the stablecoin on our platform.
BUSD will always remain backed 1:1 by USD, and we continue to support a wide range of other stablecoins.
Find more details below.
— Binance (@binance) August 31, 2023
Immediate Action Required for Users
Users who currently hold BUSD are advised to convert their assets into other stablecoins or digital assets supported on Binance.
The exchange is offering zero trading fees for converting BUSD to FDUSD, with a 1:1 conversion rate applicable only for BUSD to FDUSD conversions.
Introducing FDUSD
First Digital USD (FDUSD), issued by First Digital Group, is a new stablecoin that will replace BUSD on Binance. FDUSD is backed 1:1 with high-quality cash and cash equivalents held in segregated accounts in regulated financial institutions.
It is designed to be a programmable digital asset compatible with next-generation Web3 technologies. FDUSD debuted on Binance on July 26, 2023, with a limited-time promotion offering zero maker fees for FDUSD trading pairs.
Timeline of Changes
Several changes will occur as part of the transition away from BUSD:
- Effective September 7, 2023, withdrawals of Binance-Peg BUSD tokens via BNB Chain, Avalanche, Polygon, and Tron will be halted.
- Starting September 7, 2023, BUSD borrowings on Cross Margin will be suspended.
- BUSD-margined perpetual contracts will be phased out, although specific dates have not yet been announced.
- From October 13, 2023, BUSD subscriptions in Simple Earn Flexible Products will be discontinued. Starting September 15, 2023, BUSD subscriptions in Auto-Invest will also be discontinued.
- As of September 6, 2023, BUSD will no longer be available as a loanable and collateral asset.
Concluding Thoughts
The cessation of BUSD support will impact various financial instruments on Binance, including spot and margin trading pairs, futures contracts, and loan products. Users are advised to adjust their portfolios accordingly.
While Binance assures users that existing BUSD holdings are still backed 1:1 by USD, Paxos’s decision to halt new minting signifies a significant change in the stablecoin market. The full impact on Binance’s market position is yet to be seen.
