Crypto giant Binance has revealed plans to stop supporting all Binance USD (BUSD) products starting December 15, marking another significant step in the rollback of its own stablecoin. This decision comes after Paxos stopped issuing new coins.
According to a notice released on November 29, Binance urged users to withdraw their existing BUSD holdings or convert them to alternative assets before the December 15 deadline. Binance will disable withdrawal options after December 31st. BUSD, Automatically convert existing balances to First Digital USD (FDUSD) for certain users.
This move is part of the phased approach outlined by Binance to gradually phase out support for BUSD, with plans to stop it completely before February 2024. The first step in this direction was the termination of borrowing and lending services for stablecoins last October.
Ripple effects of Binance BUSD conversion
The significance of this switch dates back to February, when the U.S. Securities and Exchange Commission (SEC) raised concerns that BUSD may be an unregistered security. Stablecoin issuer Paxos received a Wells Notice from the SEC, which prompted the New York Department of Financial Services to issue an order to pause BUSD issuance.
In a related development on November 21, US authorities announced a settlement with Binance and its former company. CEO Changpeng Zhao, which mandated payment of $4.3 billion. As part of the deal, Zhao stepped down as CEO and Richard Teng took on responsibility for leading the exchange’s regional markets.
Before August, BUSD had established itself as one of the most substantial stablecoins by market capitalization, reaching a peak of over $23.3 billion in November 2022. However, its market capitalization has declined significantly, plummeting more than 92% in less than a year and currently hovering around $1.7. At the time of writing this report, it is $1 billion.