Binance Stops BUSD Loan Service, Users Are Transferred To Other Stablecoins

Binance has started to stop offering BUSD stablecoins. (Photo; Doc. ConceilCrypto)

JAKARTA - Binance, one of the largest crypto exchanges in the world, has announced that it will gradually discontinue its Binance USD (BUSD) loan service on October 25. This move is part of a series of attempts to stop all offerings related to BUSD by 2024.

This decision reflects a similar stance taken by New York fintech firm Paxos, which will also end their relationship with Binance. Paxos took the move in response to legal issues between Binance and the US Securities and Exchange Commission (SEC).

In addition, Paxos has announced its plans to stop exchanging BUSD into US cash and Treasury in February 2024. They have also temporarily suspended the printing of the new BUSD.

Prior to this announcement, BUSD reached its highest market capitalization of IDR 35 trillion in November 2022. However, this value has dropped to 2.23 billion (around IDR 31.8 trillion).

Alternatively, Binance has directed users to other stablecoin options, especially First Digital USD (FDUSD) which was just launched by First Digital Group. This Hong Kong-based trust firm brought FDUSD to Binance at the end of July.

This step was taken after Binance suspended the withdrawal of BUSD through several blockchain networks last month, although services on the Ethereum network are still running. Binance encourages users to switch their BUSD assets to fiat or other crypto options in the coming year.

Binance's decision comes after the US SEC indicted that BUSD served as an unregistered securities. The New York Department of Financial Services also ordered Paxos to stop issuing BUSD.