Cryptocurrency exchange Binance announced on March 17 that it has replaced the Binance USD (BUSD) holdings in its Secure Asset Fund for Users (SAFU) with TrueUSD (TUSD) and Tether (USDT). The move comes in response to Paxos’ recent move to stop minting new BUSD, which has led to the asset’s market capitalization falling.
As Paxos will no longer be minting new BUSD, #Binance has swapped the BUSD in the SAFU Fund for TUSD & USDT.
This change will have no impact on users, and the funds remain on publicly verifiable addresses.
Funds are SAFU.https://t.co/edLVgpdCUQ
— Binance (@binance) March 17, 2023
SAFU is an emergency insurance fund established by Binance in July 2018 to protect users’ funds in case of security breaches or other unforeseen events. Binance committed a percentage of trading fees to grow the fund, which was valued at $1 billion as of Jan. 29, 2022. SAFU’s wallets initially consisted of BNB (BNB), Bitcoin (BTC) and Binance USD — which has now been replaced by TUSD and USDT.
Binance assured users that the change would not impact them, their funds would continue to be held in publicly verifiable addresses, and BUSD would continue to be supported. The exchange added that it would closely monitor the fund to ensure that it remains sufficiently capitalized and top it up periodically as necessary using its own funds.
On Feb. 13, BUSD issuer Paxos Trust Company announced it would stop issuing new BUSD effective Feb. 21 in accordance with the directions of and in coordination with the New York Department of Financial Services.
Days after reports emerged that United States regulators were scrutinizing Paxos and BUSD, Binance minted nearly $50 million worth of TUSD. The transaction took place on Feb. 16, according to data from Etherscan, and came two days after Binance CEO Chanpeng Zhao mentioned in a Feb. 14 Twitter Space that Binance would look to “diversify” its stablecoin holdings away from BUSD.
With the U.S. Securities and Exchange Commission also taking action against BUSD, some crypto community members have questioned whether stablecoins are the real issue at hand or if it’s actually about Binance, as the SEC didn’t take action against Paxos’ gold-backed stablecoin, Pax Gold (PAXG).
This is an excellent point. Paxos has been specifically targeted for BUSD, but not their own Pax dollar.
Look at the bigger picture. FTX collapsed, & now suddenly the regulators are coming after Binance.
It’s almost as if a co-conspirator of Binance is informing on them. https://t.co/FhkrntttlK
— Cryptohippo (@cryptohippo65) February 13, 2023