Binance has switched the stablecoin for ERC-20 TUSD and BEP-20 USDT and will no longer maintain BUSD in its Secure Asset Fund for Users (SAFU).
Cryptocurrency exchange Binance said on March 17 that it has replaced the Binance USD (BUSD $1.00) holdings in its Secure Asset Fund for Users (SAFU) with TrueUSD (TUSD) and Tether (USDT $1.00). The action is a reaction to Paxos’ recent decision to stop issuing new BUSD, which caused the market capitalisation of the asset to decline.
SAFU is an emergency insurance fund launched by Binance in July 2018 to protect users’ cash in case of security breaches or other unanticipated circumstances.
In order to increase the fund, which has a value of $1 billion as of January 29, 2022, the crypto exchange pledged a portion of trading commissions. The initial contents of SAFU’s wallets were BNB ($337 in BNB), Bitcoin ($27,367), and Binance USD, which have now been changed with TUSD and USDT.
Users would not be impacted by the change, their cash would continue to be housed in publicly verifiable addresses, and BUSD support would remain unchanged, according to Binance’s assurances.
The exchange further stated that it would regularly monitor the fund to make sure it was adequately financed and periodically top it off with its own assets if needed.
According to the directives and in collaboration with the New York Department of Financial Services, BUSD issuer Paxos Trust Company declared on February 13 that it would suspend issuing new BUSD as of February 21.
Days after news broke that US officials were looking into Paxos and BUSD, the exchange issued TUSD valued close to $50 million. According to data from Etherscan, the exchange took place on February 16, two days after Binance CEO Chanpeng Zhao stated in a Twitter space on February 14 that Binance will seek to “diversify” its stablecoin holdings away from BUSD.
Several members of the cryptocurrency community have questioned if stablecoins are the true issue at hand or if it’s genuinely about Binance, given that the SEC did not take action against Paxos’ gold-backed stablecoin, Pax Gold, despite the SEC also taking action against BUSD (PAXG).