Binance Introduces Fresh Stablecoin as it Affirms BUSD Support Termination Strategy

Binance, a prominent player in the cryptocurrency exchange arena, has taken a significant step by encouraging its users to begin the process of converting their holdings of the Binance USD (BUSD) stablecoin into alternative assets. This move comes alongside the unveiling of a freshly listed stablecoin, as Binance formalizes its plan to gradually discontinue support for BUSD.

The confirmation of this strategic shift was released on August 31st through an official statement by Binance. This announcement validated prior speculations regarding the exchange’s intentions and affirmed that the support for BUSD will be gradually phased out, with a complete cessation planned by February 2024. This timeline aligns with Paxos’ own decision to conclude BUSD redemption around that time.

This disclosure represents Binance’s first official response to the matter, following the circulation of screenshots shared by users which depicted notifications within their mobile app outlining the forthcoming cessation of BUSD support.

In its comprehensive statement, Binance revealed its strategy to incentivize users to trade or convert their BUSD holdings into First Digital USD (FDUSD), a stablecoin that entered the scene in June. First Digital USD was launched by First Digital Group, a trust company based in Hong Kong, and was subsequently listed on the Binance platform in late July.

Furthermore, Binance assured users that the transition from BUSD to FDUSD would be fee-free, and as part of this transition, the exchange proceeded to delist eight trading pairs associated with BUSD on August 30th. Notably, Binance had previously implemented measures to promote BUSD utilization by offering zero-fee trading pairs for FDUSD in conjunction with Bitcoin (BTC) and Ethereum.

Binance’s decision to phase out BUSD support appears to be a response to the regulatory landscape. The United States Securities and Exchange Commission (SEC) had raised concerns in a wells notice issued to Paxos on February 13th, indicating that BUSD might be considered an unregistered security. Simultaneously, the New York Department of Financial Services had ordered Paxos to halt BUSD issuance on the same day, reflecting a broader regulatory scrutiny impacting the cryptocurrency sector.

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