Binance is accelerating a move away from its exchange-branded stablecoin by offering incentives for customers of the world’s biggest crypto-trading platform to convert their holdings into alternatives.
Users can shift from their Binance-branded BUSD tokens to First Digital Group’s FDUSD tokens on a one-to-one basis without incurring any trading fees, Binance said in a blog post Thursday. Binance will gradually suspend BUSD support over the coming months, starting with some services in September. The company is asking users to convert BUSD into other assets before February 2024.
Binance used a similar strategy earlier this year, offering incentives to use the TrueUSD stablecoin as it came under increasing pressure from regulators. Stablecoins are crypto tokens that are usually pegged one-to-one to an asset such as the dollar and are mostly used by traders to move digital assets between exchanges.
In February, BUSD issuer Paxos Trust Co. said it would end its relationship with Binance and stop minting the stablecoin amid pressure from regulators such as the New York State Department of Financial Services. Paxos pledged to support BUSD through at least February 2024.
The US Commodity Futures Trading Commission in March sued Binance and its co-founder Changpeng “CZ” Zhao for allegedly violating derivatives regulations and accused the firm of having “sham” compliance procedures. Binance called the suit “unexpected and disappointing.” And in June, the US Securities and Exchange Commission filed a lawsuit against the firm and Zhao, alleging that it flouted investor protection rules by operating unregistered exchange, and selling unregistered securities, among other violations.
FDUSD was introduced in June by First Digital. Trading volume for the token surpassed $1 billion in August, and it’s the fifth-biggest stablecoin on Binance by trading volume, according to researcher CCData. The token $362 million, according to CoinMarketCap, a Binance affiliate.
