Binance Announces End of BUSD Support Starting December 15

Significantly, Binance announced on December 15 that support for their BUSD stablecoin will end. This action is in line with the exchange’s earlier August declaration, which indicated a progressive removal of support. The regulatory maze that resulted from Paxos, the company that issues BUSD, being ordered to stop minting in February is what led to the decision.

Redemption Window Narrows, Transition to FDUSD

Users will be able to redeem their BUSD until February 2024, providing a short window of time for them to manage their holdings even if BUSD support is about to stop. In a recent blog post, Binance made it clear that withdrawals for BUSD would end on December 31. After this date, all balances in BUSD will automatically convert to FDUSD, a stablecoin that is distributed by FD121 Ltd.

BUSD’s 24-hour trading volume is currently little less than $400 million, a significant decrease from the $900 million reported in August and an indication of how regulatory obstacles have affected market activity.

When Paxos was instructed by the New York Department of Financial Services (NYDFS) to stop issuing BUSD in February, Binance’s stablecoin came under regulatory scrutiny. The Commodities Futures Trading Commission (CFTC) then filed a lawsuit against Binance, claiming that the company had violated federal regulations by selling unregistered cryptocurrency derivative products in the United States.

The newly appointed CEO of Binance, Richard Teng, who succeeded founder Changpeng “CZ” Zhao, reaffirmed the company’s dedication to working with regulators. Teng highlighted a commitment to collaborating with regulators and guaranteeing adherence to US regulations in a recent blog post. This promise follows a $4.3 billion settlement with the United States, which signaled a radical change in Binance’s leadership.

The move by Binance to discontinue support for BUSD is indicative of the changing regulatory environment facing the cryptocurrency industry. The automated conversion to FDUSD as customers work through the redemption timeframe is a calculated step in accordance with regulatory directions and paves the way for Binance’s cooperative approach with authorities under its new leadership.