Binance Supports FDUSD as BUSD Market Value Falls Below $1 Billion
Under pressure from US regulators, Binance has decided to support the stablecoin FDUSD. In December last year, Binance announced the discontinuation of support for BUSD products. Today, Binance further announced that Binance-Peg BUSD collateral assets will be converted to FDUSD at a 1:1 ratio later today.
Background:
Binance to Terminate BUSD Support in 2024! Will FDUSD Become a Top 100 Market Cap Stablecoin?
In collaboration with Paxos, Binance previously issued BUSD. However, in February last year, it was targeted by US regulatory agencies and ordered to cease issuance. Binance then actively sought an alternative stablecoin brand and ultimately found First Digital USD (FDUSD), issued by First Digital Limited, a subsidiary of a Hong Kong financial institution.
In November last year, Binance announced that it would stop supporting BUSD products from December 15. Users were advised to convert their BUSD assets into other assets supported by Binance or withdraw their BUSD holdings. Users can trade their BUSD assets for FDUSD with zero fees on the Binance spot market or exchange their BUSD assets for FDUSD at a 1:1 ratio on the futures trading platform.
In today’s official announcement, Binance stated that BUSD was originally issued on Ethereum. To expand the use of BUSD to other blockchains, Binance previously provided the packaged version of this stablecoin, Binance-Peg BUSD, which tracks the value of BUSD at a 1:1 ratio. Binance-Peg BUSD was issued on the BNB Chain, Avalanche, and Polygon.
According to a previous announcement, starting from January 2, 2024, at 11:00 (GMT+8), BUSD withdrawals will be suspended. Users’ BUSD balances in their Binance accounts will be automatically converted to FDUSD at a 1:1 ratio. Afterward, users can still deposit BUSD into Binance and manually convert their BUSD to FDUSD at a 1:1 ratio until further notice.
Further Reading:
Major News! Paxos to Terminate Collaboration with Binance on BUSD: Full Support and Redemption Until February 2024
CoinGecko data shows that the market value of BUSD has decreased significantly from $16.7 billion at the beginning of last year to $995 million currently, representing a decline of over 93% in nearly a year. With the sharp decline in BUSD’s market value, BUSD has dropped to the sixth position in the stablecoin market rankings.
Graph of BUSD market value. Source: CoinGecko
Etherscan data shows that among the current total supply of 995 million BUSD, the largest holder is Binance-Peg BUSD, accounting for 56.3077% or approximately 560 million BUSD.
Paxos previously stated that it will continue to support BUSD until at least February 2024, allowing redemption in US dollars or conversion to Pax Dollar (USDP), a regulated stablecoin also backed by the US dollar and issued by Paxos Trust.
In contrast, since its launch on July 26 last year, the market value of FDUSD has been consistently rising and has reached $1.81 billion, surpassing BUSD to become the fifth-largest stablecoin by market value, only behind USDT ($92.8 billion), USDC ($25.1 billion), DAI ($5.3 billion), and TUSD ($2.3 billion).
Graph of FDUSD market value. Source: CoinGecko
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