Binance swaps BUSD for USDT and TUSD for users in its Secure Asset Fund as Paxos honors $7.9 billion in BUSD redemptions.
The world’s largest exchange said the swap was a proactive move to protect user funds as the BUSD market continues to slide.
Binance SAFU Becomes At Least $1 Billion After BUSD Replacement
The Exchange will continue to ensure that the Security Fund is adequately funded and will increase the SAFU amount from time to time using its own funds. BUSD is a Binance-branded stablecoin issued by Paxos, which also issues its own Pax Dollar.
At current prices, SAFU’s bitcoin address holds approximately 16,000 BTC, which is worth $438,518,660.
The fund’s BNB and USDT wallets contained roughly 1,364,102 BNB or $458,257,191.
Binance will continue to hold user funds in publicly verifiable addresses and support BUSD trading.
Binance funded SAFU, which started in 2018, using a proportion of trading fees.
The BUSD replacement comes about a month after New York regulators ordered its issuer Paxos to stop mining the coin.
Following the order, Paxos redeemed or converted $7.9 billion in BUSD tokens into fiat in 32 days. The issuer said it will continue to support the asset until at least February 2024.
Coinbase suspended business trading shortly after the New York order, saying the token no longer met its listing requirements.
Moody’s warns of a crisis of confidence in fiat-backed stablecoins
Ratings agency Moody’s said that the decline of the USDC stablecoin following the recent collapse of Silicon Valley Bank could intensify scrutiny of stable coins in the US.
Last week, USDC fell to around $0.92 on crypto exchange Kraken following $1 billion in redemptions after US regulators placed SVB under receivership.
Following last week’s plunge event, Moody’s says that stable coins that rely on fiat currencies to maintain their peg to the dollar could be suffering from a recent crisis of confidence in medium-sized banks such as SVB and Signature.
USDC Issuer Circle Honors $5 Billion in Mint and Redemption After Depeg. The Federal Deposit Insurance Corporation’s acquisition of Silicon Valley Bank soon restored the peg.
However, Moody’s said that if the regulator had not intervened, Circle would have been required to liquidate the assets in order to honor the transaction.
Following the USDC debase, House Financial Services Chair Representative Maxine Waters said she and Senate Banking Committee Chairman Representative Patrick McHenry were committed to expediting the passage of the stablecoin bill they drafted last year.
BeInCrypto has reached out to the company or the person involved in the story for an official statement regarding the recent development, but has yet to hear back.