In a surprising turn of events, Binance, the world’s leading cryptocurrency exchange, has announced plans to cease support for its widely used stablecoin, BUSD, by 2024. The spotlight now falls on FDUSD, the new entrant to the Binance stablecoin arena. Here’s a deep dive into what led to this change, how it affects BUSD holders, and what FDUSD brings to the table.
Binance Stops BUSD: Why is BUSD Dead?
BUSD’s discontinuation isn’t as abrupt as it may appear. The roots trace back to regulatory complications that involved the stablecoin’s issuer, Paxos. Following scrutiny from U.S. regulators, notably a Wells notice from the U.S. Securities and Exchange Commission (SEC) – which viewed the stablecoin as a security – Paxos suspended new BUSD issuances. The regulatory scuffle saw the stablecoin’s circulating supply plummet from its peak of over $20 billion to a mere $3 billion.
Aligned with Paxos’ decision, Binance revealed that by February 2024, it would wind down BUSD support. From spot and margin trading pairs to features like Binance Pay and Binance Gift Cards, BUSD will eventually be phased out from the platform. While Paxos and Binance have both contested the SEC’s classification, the crypto world swiftly sidestepped BUSD amidst the uncertainty.
What is FDUSD Stablecoin?
Stepping in to fill the gap left by BUSD, First Digital USD (FDUSD) emerges as Binance’s suggested alternative. Issued by First Digital Trust, a Hong Kong-based custodian, FDUSD has already made its mark on Binance. Within a month of its July listing, its market capitalization shot past $300 million, and Binance notably integrated it into several products, including peer-to-peer platforms.
However, despite this promising start and Binance’s backing, FDUSD has a long road ahead. Currently, its trading volume stands below $100 million, and its presence remains limited to fewer than five crypto exchanges. Comparatively, the reigning stablecoin champion, USDT, boasts a market domination of 66.14%, dwarfing FDUSD’s 0.28%.
What will Happen to BUSD Hodlers?
For current BUSD holders, the path ahead is clear but potentially cumbersome. Binance has urged its users to convert BUSD holdings to FDUSD, and to facilitate this transition, the exchange is offering a 1:1 conversion rate with zero fees. This generous gesture ensures that users don’t bear any financial brunt while switching between the stablecoins. Deposits and withdrawals of the BUSD (ERC-20) token will continue on the Ethereum network until further notice.
For those keen on procuring FDUSD, the stablecoin is currently listed on Binance with special promotions, including zero maker fees for its trading pairs. Its market trajectory, while in early stages, has been encouraging, and the backing of a giant like Binance signals potential growth.
How to Buy FDUSD?
You can easily buy FDUSD stablecoin from Binance itself. Click here to open an account and buy FDUSD.
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