HomeNewsBinance Drops Paxos-Based BinanceUSD; Sets Sights on New Stablecoin: Comprehensive Details

Binance Drops Paxos-Based BinanceUSD; Sets Sights on New Stablecoin: Comprehensive Details

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  • Binance confirms plans to phase out support for its stablecoin, Binance USD (BUSD), in line with Paxos’ decision to halt BUSD redemption by February 2024.
  • The exchange encourages users to convert their BUSD to First Digital USD (FDUSD), a new stablecoin listed on Binance.

A Watershed Moment in Stablecoin History: The Shift from BUSD to FDUSD

In a decisive move that reverberated through the crypto-verse, Binance, the renowned cryptocurrency exchange, has officially confirmed the impending cessation of support for its widely-used stablecoin, Binance USD (BUSD). This decision echoes Paxos’ earlier announcement to discontinue BUSD redemption by February 2024. Binance’s statement provided the first official confirmation following rampant speculation incited by screenshots of an in-app pop-up circulated by users.

Binance’s resolution emanates from a regulatory matrix: the U.S. Securities and Exchange Commission (SEC) had issued a Wells notice to Paxos, alleging that BUSD is an unregistered security. On the same day, the New York Department of Financial Services (NYDFS) mandated Paxos to halt BUSD issuance. It’s thus clear that the regulatory scrutiny propelled the strategic pivot.

First Digital USD: The New Stablecoin Prodigy

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Within this shifting stablecoin landscape, Binance is urging users to transition their BUSD holdings to First Digital USD (FDUSD). This new stablecoin, inaugurated in June by Hong Kong-based First Digital Group, found its way to Binance’s listing in late July. Binance appears keen to smooth this transition: it has provisioned fee-free trading pairs between BUSD and FDUSD, and has also delisted eight BUSD pairs as of August 30.

The exchange had further sweetened the pot by offering zero-fee trading pairs for FDUSD with high-market cap assets like Bitcoin (BTC) and Ether (ETH), creating a lucrative ecosystem for users to switch.

What sets FDUSD apart from its precursor BUSD is not just the entity backing it, but also its relative insulation from the looming regulatory headwinds that led to the phasing out of BUSD. As the sector reacts to this pivotal change, one can deduce that the onus is on First Digital Group to maintain FDUSD’s integrity as a stablecoin, lest it finds itself in the same quagmire as BUSD.

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The days ahead are fraught with strategic shifts in the stablecoin market, as users, investors, and regulatory bodies alike navigate this complex transition. With Binance no longer supporting BUSD in futures and margin trading pairs, and urging immediate conversion to FDUSD, the stablecoin market is undeniably at a critical juncture.

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Jane Smith
Jane Smith
As a Bitcoin Journalist, I am dedicated to reporting the latest developments in cryptocurrency, with a particular focus on Bitcoin. Through extensive research and interviews with industry experts, I provide accurate and up-to-date information on the ever-evolving world of cryptocurrencies. My goal is to help readers stay informed and make informed decisions regarding their investments in this rapidly changing field.
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