Binance has announced its decision to discontinue support for its native stablecoin, BUSD, with the process set to commence on December 31. As part of this move, numerous users holding Binance USD balances will undergo an automatic conversion into First Digital USD.
This step represents the latest move by Binance in the gradual phase-out of services related to its native stablecoin. The exchange had previously revealed its intention to progressively terminate support for BUSD before February 2024. The process began with the cessation of borrowing and lending services for the stablecoin in October.
The decision to wind down BUSD services traces back to February when the United States Securities and Exchange Commission (SEC) issued a Wells notice to Paxos, the issuer behind BUSD, suggesting that the stablecoin might be an unregistered security. Subsequently, the New York Department of Financial Services directed Paxos to halt the issuance of BUSD.
In a significant development on November 21, U.S. authorities disclosed that they had reached a settlement with Binance and its former CEO, Changpeng Zhao, necessitating a payment of $4.3 billion. As part of this settlement, Zhao resigned as CEO, and Richard Teng, the exchange’s head of regional markets, assumed the role.
Prior to August, BUSD held a prominent position among stablecoins by market capitalization, reaching a peak of over $23.3 billion in November 2022. However, at the time of this publication, the stablecoin’s market cap had dwindled to approximately $1.7 billion, marking a decline of over 92% in the last 12 months.