Binance to end support for BUSD, encourages conversion to FDUSD

Quick Take

Binance will phase out support for the BUSD stablecoin by February 2024, encouraging conversion to another stablecoin called FDUSD.
Issuer Paxos halted the minting of new BUSD tokens earlier this year.

Binance plans to gradually reduce support for BUSD products by February 2024, according to an announcement from the crypto exchange today.

While Binance reassured users that BUSD will always maintain its 1:1 backing to USD, it encouraged the conversion of the stablecoin into other available assets on its platform before February next year. It added that users can trade BUSD for First Digital USD (FDUSD) with zero trading fees or convert BUSD balances to FDUSD at a 1:1 ratio.

FDUSD was launched in June by the Hong Kong-based First Digital Group and listed on the crypto exchange in July. “Binance encourages users to convert BUSD to other stablecoins prior to February 2024, and users can manually convert their BUSD balances to First Digital USD (FDUSD) at a 1:1 ratio using Binance Convert,” First Digital told The Block.

Additional BUSD product support phasing out

Starting September 7, withdrawals of Binance-Peg BUSD tokens via BNB Chain, Avalanche, Polygon and Tron will be halted while deposits will temporarily continue. Deposits and withdrawals of BUSD ERC-20 tokens on Ethereum will also continue until further notice.

Binance will delist BUSD spot and margin trading pairs during this period, with specific delisting details to follow. From September 7, the platform will also suspend BUSD borrowings on cross margin, and from October 19, users will no longer be able to transfer additional BUSD as new collateral to their cross-margin wallet. However, transfers of other tokens as collateral remain unaffected.

Binance is also delisting BUSD-margined perpetual contracts and the platform's earn and loan services will undergo adjustments related to BUSD by the end of the year. Additionally, Binance Gift Card will delist BUSD by September 30, and Binance Pay Merchant Service will deactivate BUSD as an order currency on the same date.

The announcement comes after BUSD-issuer Paxos said it was halting the minting of new tokens on Feb. 13 following an order from the New York Department of Financial Services (NYDFS) to stop issuing the stablecoin. The Securities and Exchange Commission (SEC) said it would sue Paxos for listing BUSD the same day, alleging it is an unregistered security. Paxos said it would honor BUSD redemptions "through at least February 2024" at the time.