Binance swapped BUSD for USDT and TUSD in its Secure Asset Fund for Users 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 BUSD’s market fall continues to fall.
Binance SAFU Holds at Least $1 Billion After BUSD Replacement
The exchange will continue to ensure that the safety fund has enough money and will increase the SAFU amount periodically using its own money. BUSD is a Binance-branded stablecoin issued by Paxos, which also issues its own Pax dollar.
At current prices, the SAFU’s Bitcoin address holds about 16,000 BTC, worth $438,518,660.
The fund’s BNB and USDT wallet contains roughly 1,364,102 BNB or $458,257,191.
Binance will continue to hold user funds on publicly verifiable addresses and support BUSD trading.
Binance funds the SAFU, which started in 2018, using a proportion of trading fees.
The BUSD replacements come roughly a month after New York regulators ordered its issuer Paxos to stop minting the token.
Following the order, Paxos redeemed or converted $7.9 billion BUSD tokens to fiat in 32 days. The issuer said it would continue supporting the asset until at least February 2024.
Coinbase suspended BUSD trading shortly after the New York order, saying the token no longer met its listing requirements.
Moody’s Warns of Crisis of Confidence in Fiat-Backed Stablecoins
Rating agency Moody’s said the recent depegging of the USDC stablecoin following the collapse of Silicon Valley Bank might intensify scrutiny on stablecoins in the U.S.
Last week, USDC dropped to about $0.92 on the crypto exchange Kraken, following $1 billion in redemptions after the U.S. regulators placed SVB under receivership.
Following last week’s depegging event, Moody’s says stablecoins that rely on fiat to keep their peg to the dollar may suffer from the recent confidence crisis in mid-size banks like SVB and Signature.
USDC issuer Circle honored $5 billion in minting and redemptions after the depeg. The Federal Deposit Insurance Corporation’s takeover of Silicon Valley Bank soon restored the peg.
However, Moody’s said that if the regulator had not stepped in, Circle would have needed to liquidate assets to honor transactions.
After the USDC depeg, House Financial Services chair Rep. Maxine Waters said she and Senate Banking Committee Chair Rep. Patrick McHenry were committed to expediting the passage of a stablecoin bill drafted last year.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.