Binance Shakes Up Stability: BUSD Exits Stage Left for TUSD and USDT

Big Changes at Binance

On March 17, Binance pulled a fast one by replacing all Binance USD (BUSD) holdings in its Secure Asset Fund for Users (SAFU) with TrueUSD (TUSD) and Tether (USDT). This news comes right on the heels of Paxos announcing they would stop minting new BUSD, leading to quite the hairy situation for this once-popular stablecoin. Kind of like when you find out your favorite band is breaking up—sad, but there’s still hope for a good solo career.

What The SAFU Fund Is All About

If you’re scratching your head wondering what SAFU stands for, it’s a nifty emergency insurance fund set up by Binance back in July 2018. Think of it as a financial safety net for users in case things go south. Binance has been filling this piggy bank with a percentage of trading fees, and as of January 29, 2022, it boasted a cool $1 billion. Originally, this fund was chillin’ with BNB, Bitcoin, and BUSD, but now it’s spruced up with TUSD and USDT.

Keeping Users In The Loop

Binance is making sure users don’t feel the pinch from this sudden swap. The exchange reassured everyone that users’ funds are still where they should be—held in clearly visible and verifiable addresses. They’ve even promised to keep a close eye on this fund and will top it up as needed using their own stash. Like a good parent who constantly checks on the kids to ensure they’re not getting into trouble.

A Rocky Road for BUSD

As if things couldn’t get any more complicated, Paxos Trust Company declared they’d stop minting new BUSD starting February 21—a decision made in consultation with the New York Department of Financial Services. This was more awkward than a first date when you realize you have nothing in common!

SEC Scrutiny: The Big Question Marks

In an interesting twist, major U.S. regulators have been eyeing BUSD like a hawk. The SEC’s focus has raised eyebrows, leading many in the crypto community to ask whether the regulatory heat is truly aimed at stablecoins as a whole or Binance specifically. Apparently, the SEC has not blinked twice at Paxos’ gold-backed stablecoin, Pax Gold (PAXG). It’s almost like everyone is looking side-eye at Binance while pretending the gold isn’t gleaming in the background. Hopefully, they’ll sort it all out, and we can get back to the important things in life, like cat videos!