Cryptocurrency giant Binance has revealed plans to discontinue its support for all Binance USD (BUSD) products, effective December 15, marking another significant step in the winding down of its native stablecoin. This decision comes on the heels of Paxos’ cessation of new coin minting.
According to a notice released on November 29, Binance urged its users to either withdraw or convert their existing BUSD holdings into alternative assets before the cutoff date of December 15. After December 31, Binance will deactivate the withdrawal option for BUSD, automatically converting existing balances into First Digital USD (FDUSD) for specific users.
This move is part of a phased approach outlined by Binance earlier to gradually discontinue support for BUSD, with a complete cessation planned before February 2024. The initial step in this direction was the termination of borrowing and lending services for the stablecoin back in October.
Ripple Effects of Binance’s BUSD Transition
The significance of this transition extends back to February when the United States Securities and Exchange Commission (SEC) raised concerns, indicating that BUSD might be an unregistered security. Paxos, the stablecoin issuer, received a Wells notice from the SEC, prompting the New York Department of Financial Services to order a pause in BUSD issuance.
In a related development on November 21, U.S. authorities announced a settlement with Binance and former CEO Changpeng Zhao, mandating a payment of $4.3 billion. As a part of this agreement, Zhao stepped down from his role as CEO, and Richard Teng assumed the responsibilities of leading the exchange’s regional markets.
Prior to August, BUSD ranked among the most substantial stablecoins by market capitalization, reaching a pinnacle of over $23.3 billion in November 2022. However, its market cap has declined significantly, plummeting by more than 92% within a year, now standing at approximately $1.7 billion at the time of this report.