Cryptocurrency exchange giant Binance is making significant changes to its services by announcing the discontinuation of borrowing and lending services for its native stablecoin, Binance USD (BUSD), by October 25, 2023. This decision, which was revealed in a recent announcement, entails the closure of all outstanding BUSD loan and collateral positions by the end of this month.
The move signals a notable shift in Binance’s strategy, as it takes steps to gradually phase out support for BUSD. Notably, this decision comes on the heels of a decision made by New York fintech firm Paxos, the issuer of BUSD, on February 13, 2023, to terminate its relationship with Binance. This decision stemmed from the ongoing litigation between Binance and the U.S. Securities and Exchange Commission (SEC).
Paxos communicated its intention to halt redemptions from BUSD to underlying U.S. cash and Treasuries by February 2024, coupled with the temporary cessation of new BUSD minting. Responding to these developments, Binance has now opted to completely discontinue BUSD-related services by the same year.
Previously, BUSD had ranked among the largest stablecoins in the cryptocurrency market, boasting a peak market capitalization of $23 billion in November 2022. However, its market capitalization has since witnessed a significant decline, currently standing at $2.23 billion.
The termination of BUSD services has been carried out in phases, with Binance suspending BUSD withdrawals via BNB Chain, Avalanche, Polygon, Tron, and Optimism last month. Nevertheless, BUSD deposits continue to be accepted across all supported blockchains.
Binance is actively encouraging its users to convert their BUSD balances into fiat currencies or alternative cryptocurrencies ahead of the impending service termination deadline in 2024.
Although Binance is discontinuing BUSD-related services, platform users will still retain the option to borrow and lend using other stablecoins such as Tether (USDT), Dai, TrueUSD (TUSD), and USD Coin (USDC). Notably, Binance presently offers an estimated annual percentage yield of 3% for lending BUSD.
Binance’s decision to phase out BUSD services underscores the ever-evolving nature of the cryptocurrency industry and the strategic adaptations made by leading exchanges in response to regulatory and market dynamics. It serves as a reminder of the importance for users to stay informed about changes in cryptocurrency services offered by platforms to ensure a seamless transition and effective management of their assets.
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