Binance, under the supervision and regulation in the United States, has decided to support the stablecoin FDUSD and announced the discontinuation of support for BUSD products in December last year. Binance further announced today that the collateral assets of Binance-Peg BUSD will be converted to FDUSD at a 1:1 ratio later today.
Background:
Binance terminates BUSD early! Expiration date set for December 15th, FDUSD becomes the 6th largest stablecoin in the market.
Binance, which previously collaborated with Paxos, the issuer of BUSD, to issue BUSD, was ordered to cease production by US regulatory agencies in February last year. Subsequently, Binance actively sought alternative stablecoin brands and ultimately partnered with First Digital Limited, a subsidiary of a Hong Kong financial institution, to issue First Digital USD (FDUSD).
Binance announced in November last year that it would cease support for BUSD products starting from December 15th. Users were advised to convert their BUSD assets to other supported assets by Binance or withdraw their BUSD holdings. Users can trade their BUSD assets for FDUSD with zero fees on Binance’s spot market, or exchange their BUSD assets for FDUSD at a 1:1 ratio on the futures trading platform.
Today, Binance further announced that BUSD was originally issued on Ethereum, and to expand the utilization of BUSD to other blockchains, Binance previously offered a wrapped version of BUSD called Binance-Peg BUSD, which tracks the value of BUSD at a 1:1 ratio. Binance-Peg BUSD was issued on BNB Chain, Avalanche, and Polygon.
According to the previous announcement, starting from January 2, 2024, at 11:00 (GMT+8), BUSD withdrawal services will be suspended. Users’ BUSD balances in their Binance accounts will be automatically converted to FDUSD at a 1:1 ratio. Afterward, users can continue to deposit BUSD to Binance and manually convert their BUSD to FDUSD at a 1:1 ratio until further notice.
CoinGecko data shows that the market capitalization of BUSD has significantly declined from $16.7 billion at the beginning of last year to the current $995 million, representing a drop of over 93% in nearly a year. With the sharp decline in BUSD market capitalization, BUSD has dropped to 6th place in the stablecoin market rankings.
Etherscan data shows that out of the current total supply of 995 million BUSD, the largest holder is Binance-Peg BUSD, accounting for 56.3077% with approximately 560 million tokens.
Paxos previously stated that it will continue to support BUSD until at least February 2024, allowing redemption in US dollars or conversion of BUSD to Pax Dollar (USDP), another regulated stablecoin backed by the US dollar and issued by Paxos Trust.
In comparison, since the launch of FDUSD on July 26th last year, its market capitalization has been continuously increasing and has now reached $1.81 billion, surpassing BUSD to become the 5th largest stablecoin in terms of market capitalization, only behind USDT ($92.8 billion), USDC ($25.1 billion), DAI ($5.3 billion), and TUSD ($2.3 billion).