Binance ending support for BUSD

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Binance ending support for BUSD

Binance, a global cryptocurrency exchange, announced on Oct. 3 that it will discontinue support for Binance's dollar borrowing and staking positions by Oct. 25, 2023. This closure appears to be part of a wider plan to phase out the troubled stablecoin, as regulatory scrutiny grows more intense.

Binance has urged its users to convert their holdings of BUSD to First DigitalUSD as part of the gradual phasing out of support for the stablecoin. The exchange reassured its users that BUSD will remain backed 1:1 by USD until its support ends in February 2024.

Binance's decision to phase out BUSD has been a significant blow to regulatory pressure. In response to criticism by U.S. regulators, Paxos, the issuer of BUSD, has announced it would stop the issuance of the stablecoin. The SEC filed suit against Binance earlier this summer for alleged violations of U.S. securities law.

Since then, BUSD's circulating supply has dropped precipitously, from a peak of more than $20 billion to about $3 billion.

The exchange also deleted BUSD from its Secure Asset Fund for Users, claiming that the removal was a strategic move to safeguard users, given the decreasing market cap of BUSD.

The U.S. Securities and Exchange Commission has filed a lawsuit against Binance and its CEO, Changpeng Zhao, for alleged violations of federal securities laws. Binance is accused of profiting billions by courting U.S. investors to buy, sell, and trade on its unregistered platform. The lawsuit also involves BAM Trading Services Inc and BAM Management, who Binance teamed up with in 2019 to launch Binance US. The SEC asserted that BNB and BUSD are securities. Binance has made it clear that BNB is a token that is meant to create an internal economy and does not represent an investment contract, therefore Binance claims that it is not a security.