Binance, a leading cryptocurrency exchange, will cease support for Binance USD (BUSD) by February 2024 following Paxos’s decision to halt new BUSD minting. The move impacts a range of Binance services, including spot and margin trading, futures, and loans.
Immediate Action Required for Users
Users holding BUSD are advised to convert their assets into other stablecoins or digital assets supported on Binance. The exchange offers zero trading fees for converting BUSD to FDUSD, with a 1:1 conversion rate applicable only for BUSD to FDUSD conversions.
What is FDUSD?
First Digital USD (FDUSD) is issued by First Digital Group, which includes First Digital Trust, a leading qualified custodian headquartered in Hong Kong. FDUSD is backed 1:1 with high-quality cash and cash equivalents held in segregated accounts in regulated financial institutions. The stablecoin is designed to be a programmable digital asset compatible with next-generation Web3 technologies. It debuted on Binance on July 26, 2023, with a zero-maker fee limited-time promotion for FDUSD trading pairs.
Timeline of Changes
Deposits & Withdrawals: Effective September 7, 2023, withdrawals of Binance-Peg BUSD tokens via BNB Chain, Avalanche, Polygon, and Tron will be halted.
Cross Margin: Starting September 7, 2023, BUSD borrowings on Cross Margin will be suspended.
Futures: Binance will phase out BUSD-margined perpetual contracts, with dates to be announced.
Earn Products: BUSD subscriptions in Simple Earn Flexible Products and Auto-Invest will be discontinued starting October 13, 2023, and September 15, 2023, respectively.
Loans: BUSD will be removed as a loanable and collateral asset from September 6, 2023.
Financial Instruments Affected
The cessation of BUSD support will affect various financial instruments on Binance, including spot and margin trading pairs, futures contracts, and loan products. Users should adjust their portfolios accordingly.
While Binance assures a 1:1 USD backing for existing BUSD, the halt in new minting by Paxos signals a significant shift in the stablecoin market. The full impact on Binance’s market position remains to be seen.
Blockchain infrastructure provider Paxos has published a report aimed at helping the cryptocurrency community navigate the current market conditions during the crypto winter. The Paxos Crypto Winter Report 2023 identifies several key opportunities for crypto projects, including seeking solutions and partnerships.
According to the report, those who view the crypto winter as a “season for bridge-building” will come out ahead of the others. This means partnering with businesses that implement technologies that aim to meet the “real-world needs of the financial sector.” By doing so, projects can position themselves for success once the market recovers.
The report also emphasizes the usefulness of stablecoins, one of the crypto use cases that have “consistently proven itself over time.” Clara Medalie, the director of research at the digital asset data provider Kaiko, explains that stablecoins have been very useful for the entire industry. However, there is still room for improvement in terms of transparency over the reserves of these stablecoins.
Medalie believes that greater transparency is coming: “We need more transparency over the reserves of these stablecoins, which I think we’re going to see.” This will help to ensure that stablecoins remain a viable option for the industry moving forward.
While stablecoins may be an important tool for the industry, there are differing opinions on their regulation. The CEO and executive director of the Stellar Development Foundation, Denelle Dixon, believes that regulating stablecoins may be necessary to maintain a strong dollar globally. Dixon argues that a USD stablecoin is the “way to see that happen.”
On the other hand, the Bank of International Settlements (BIS) recently published a working paper that deems stablecoins a less preferable form of tokenized money. The report likens stablecoins to bearer instruments that were prevalent during the era of “free banking” in the United States. While the BIS recognizes the potential benefits of stablecoins, it ultimately concludes that they pose significant risks to financial stability.
Despite differing opinions on stablecoins, the Paxos Crypto Winter Report 2023 emphasizes the importance of seeking solutions and partnerships during the current market conditions. By doing so, projects can position themselves for success once the market recovers.
On March 12, New York regulators and the United States Federal Deposit Insurance Corporation shut down Signature Bank, a crypto-friendly bank that had reportedly become a systemic risk to the US economy. As news of the shutdown spread, several crypto firms came forward to report that they had funds tied up with the bank.
Coinbase, one of the largest crypto exchanges in the world, announced via Twitter that it had around $240 million in corporate funds at Signature Bank that it expected to be fully recovered. Stablecoin issuer and crypto firm Paxos also reported that it had $250 million held at the bank, but noted that it held private insurance that covered the amount not covered by the standard FDIC insurance of $250,000 per depositor.
Celsius, a crypto lender that recently filed for bankruptcy, reported that Signature Bank had held some of its funds, but did not disclose the amount. However, the Celsius Official Committee of Unsecured Creditors, which represents the interests of account holders, added that “all depositors will be made whole.”
As news of the shutdown and related crypto exposure spread, other firms in the crypto industry came forward to quell fears about their related exposures. Robbie Ferguson, co-founder of Web3 game development platform Immutable X, and Mitch Liu, co-founder of the media-focused Theta Network blockchain, both separately tweeted that their respective companies had no exposure to Signature.
Crypto.com also reported in a tweet by CEO Kris Marszalek that it had no funds in the bank. Similarly, Paolo Ardoino, the chief technology officer of stablecoin firm Tether, tweeted that Tether had no exposure to Signature Bank.
While some firms expect to recover their funds in full, the closure of Signature Bank has raised concerns about the risks associated with the crypto industry. In addition to the shutdown of Signature Bank, the Federal Reserve announced that the FDIC had been approved to take actions to protect depositors at Silicon Valley Bank, a tech-startup-focused bank that had experienced liquidity issues due to a bank run that spread contagion to the crypto sector. The Fed also announced a $25 billion program to ensure ample liquidity for banks to cover the needs of their customers during times of turbulence.
Overall, the closure of Signature Bank highlights the challenges and risks associated with the rapidly growing and often unpredictable crypto industry. While some firms may be able to recover their funds, others may face significant losses, underscoring the need for greater regulatory oversight and risk management in the sector.
According to recent reports, the stablecoin issuer Paxos was reportedly engaging in conversations with the United States Securities and Exchange Commission (SEC) on the Binance USD (BUSD) stablecoin after getting a Wells notice from the relevant financial institution.
In an article that was released by Reuters on February 21, Charles Cascarilla, the chief executive officer of Paxos, was quoted as saying that the company was “engaging in productive negotiations” with the SEC and that they will continue to talk behind closed doors. This statement was made in reference to negotiations that are taking place between Paxos and the SEC. After the SEC filed a lawsuit against the issuer of the stablecoin, claiming that the BUSD cryptocurrency was an unregistered securities, the issuer of the stablecoin decided to publish the research shortly after the complaint was filed.
Cascarilla was quoted as saying that Paxos would consider initiating legal action in order to support its assertion that BUSD did not constitute a security. These stories are based on statements made by Cascarilla. Paxos has a license to operate in the state of New York in the United States, and on February 13, the New York Department of Financial Services issued an order forcing the company to stop the issuance of BUSD. Paxos possesses a license to operate in New York. The corporation has revealed that it would stop minting the stablecoin as of the 21st of February, as stated in the notice that it published.
It is possible that the investigation into Paxos was prompted by a tip from Circle, which supposedly lodged a complaint with the state regulator regarding Binance’s reserves. The New York Department of Financial Services is responsible for overseeing the financial industry in the state of New York. Binance’s analytics showed that there was a rush of withdrawals following the news concerning BUSD, with around $2.7 billion worth of cash leaving the site between February 12 and February 13. This information was disclosed on February 13.
Financial services using cryptocurrencies The head of research at Matrixport is of the opinion that the current investigation of Paxos and its Binance USD (BUSD) token is not an assault on stablecoins in and of itself.
Matrixport’s Markus Thielen noted in a study that was published on February 14 that the BUSD issuer, Paxos Trust Company, may not have been as severe as it should have been with its control of the token.
In addition, he said that it “does not seem to be about stablecoins” as the root of the problem.
According to Thielen’s argument, “Paxos had failed its commitment to undertake targeted, periodic risk assessment and due diligence of Binance and Paxos-issued BUSD consumers.” Paxos is the company that issues the BUSD tokens.
“as a consequence of multiple outstanding problems connected to Paxos’ management of its connection with Binance,” the New York Department of Financial Services (NYDFS) ordered Paxos to cease the issuing of BUSD on February 13th.
Paxos has also just disclosed that the United States Securities and Exchange Commission (SEC) sent a Wells notice to the stablecoin issuer on February 3, for the alleged failure of the issuer to register the offering in accordance with federal securities laws.
According to Thielen, BUSD has issued $11 billion worth of tokens on Ethereum, but there is also $4.8 billion worth of Binance-Peg BUSD Tokens on the BNB Smart Chain. Binance offers a service for pegged tokens in which BUSD is locked on Ethereum and Binance-Peg BUSD is released on BNB Chain in addition to other blockchains such Avalanche and Polygon.
“It seems that NYDFS is now apprehensive that the $4.8 billion may not be fully supported or have had difficulty with being 1:1 backed,” he added. “This looks to be a concern on the part of NYDFS.”
Paxos, on the other hand, said as recently as February 13 that “BUSD tokens created by Paxos Trust have and always will be backed 1:1 by US dollar-denominated reserves, completely segregated and stored in separate distant accounts.” Paxos made this claim.
Thielen points out that the event on January 24 in which Binance mingled client money with collateral might have also been a catalyst for some of the regulatory steps that have been taken.
Some people are still under the impression that other stablecoins might be in danger as a result of the recent steps taken against BUSD.
Paxos has asserted as of late that “there are categorically no further complaints against Paxos,” in addition to the ongoing controversy surrounding BUSD.
“USDC is a regulated dollar digital currency that was issued as stored value in accordance with United States money transfer legislation,” claims Circle.
“Facts and circumstances in any type of regulatory action like this are all different, as are the structural and regulatory considerations with each of the cryptocurrencies that are in circulation around the world,” Disparte added. “Facts and circumstances in any type of regulatory action like this are all different.”
However, Thielen has emphasized to those in the sector that they need not be excessively anxious about what the future holds for BUSD.
“Binance has shot itself a little bit in the foot here, but they are working on it and it should be rectified. The question is, “Should we truly be worried?” Thielen stated.
“I don’t believe that’s the case. Is the peg going to break? NO. We are no longer in a bear market, which is characterized by investors being concerned about potential losses; while, in bull markets, investors are more focused on potential gains.
As a direct result of the recent announcement that Paxos and its stablecoin Binance USD might be subject to regulatory action, the cryptocurrency exchange Binance has experienced a significant increase in the number of withdrawals that have been made over the course of the last twenty-four hours (BUSD).
Peckshield claims that there was a total of 342 million BUSD worth of tokens that were destroyed over the course of the previous twenty-four hours. These redemptions took occurred close to the same time period when substantial activity was taking place with the BUSD token.
On the 12th of February, it was made public that the statement that the United States Securities and Exchange Commission had given notice of possible enforcement action against Paxos had been made. This statement was made public because it was made by the United States Securities and Exchange Commission. Paxos refutes the corporation’s allegation, which was that the stablecoin is an unregistered security. The corporation’s claim can be found in the previous sentence. Paxos challenges the validity of this assertion in his response.
Binance had multichain token net outflows of $788.5 million during the course of twenty-four hours, as shown by the numbers that were produced by the blockchain intelligence platform Nansen. During the time period in question, this was a result of withdrawals of $2.7 billion exceeding inflows of around $1.97 billion during that time period.
According to the numbers that were provided by Dune analytics, this is the greatest 24-hour net outflow that has occurred since December 17, when Binance’s proof-of-reserve audits were pulled down from the website of auditor Mazars. This happened when Binance’s proof-of-reserve audits were pulled down from the website of auditor Mazars.
The market “handled with ease” a recent sell-off that lasted for twelve hours and featured withdrawals worth “more than one billion,” according to the spokeswoman for the exchange. According to the information presented in the article, the market was successful in accomplishing this goal in spite of the fact that it encompassed “more than one billion.”
Sao Paolo-based digital banking giant, Nubank has veered into the cryptocurrency trading ecosystem with initial support for Bitcoin (BTC) and Ethereum (ETH)- the two largest cryptocurrencies by market capitalisation.
Long being associated with digital currencies, Nubank, whose parent company, Nu Holdings Ltd, is listed on the New York Stock Exchange, said its entry into the crypto trading space will help simplify the trading process for investors.
The trading will occur in-app, and existing Nubank customers will not need to open new accounts to access the crypto trading interface.
“There is no doubt that crypto is a growing trend in Latin America, one that we have been following closely and believe will have a transformational impact on the region. Yet the trading experience is still very niche. Customers either lack information to feel confident to enter this new market or just get frustrated by complex experiences,” said David Vélez, CEO and founder at Nubank.
“At Nubank, we aim to empower our customers by putting them in control of their money. Therefore, we built an experience that was simple and intuitive enough to broaden access to new segments while being robust and powerful for the more crypto-savvy.”
The firm said its new product offering is in partnership with Paxos, a digital assets platform that will serve as its custody and brokerage partner. The two companies involved in the trading indicate how Nubank hopes to leave no stone unturned concerning simplicity and security for all of its customers.
Nubank also announced it has purchased Bitcoin with approximately 1% of its balance sheet. The acquisition came at a time when the broader crypto ecosystem was experiencing a massive turmoil, with Bitcoin changing hands at $29,342.10, down 6.26% at the time of writing, per data from CoinMarketCap.
Days are gone when cryptocurrencies were deemed a get-rich-quick scheme, as consumers in the United States are changing their minds, treating crypto as ideal investment vehicles, according to a new study by blockchain infrastructure platform Paxos.
In a statement, Paxos pointed out that consumers were eyeing financial institutions to fulfil their crypto ambitions. 62% of current crypto holders acknowledged that they would take advantage if their banks floated a crypto investment functionality.
The narrative about crypto trading being only entitled to a small group of enthusiasts is long gone because it is increasingly going mainstream.
Per the Paxos study:
“Forty-four percent of respondents made their first crypto purchase within the past year, and another 31 percent within the past two years.”
Crypto provides chances to fintech and financial systems
As the market is no longer ignoring the presence ofcryptocurrencies, Walter Hessert believes that institutions that will incorporate capabilities like crypto trading into their platforms will have the chance to get a piece of the lucrative and growing digital currency cake.
The head of strategy at Paxos pointed out:
“Our survey shows people want to engage with digital assets through their existing, trusted service providers.”
The report also stated that cryptocurrencies emerged as more accessible investments than traditional ones, with many respondents saying crypto was their first foray into investment.
According to the study, males have a higher likelihood of trading crypto more than once per week at 28% compared to females at 18%.
On the other hand, women favour getting crypto from established fintech apps like PayPal at 24% versus men at 16%.
Meanwhile, PayPal recently welcomed leading experts to joinits advisory committee to create a more inclusive digital financial ecosystem and improve current and future products.
On the other hand, the fintech sector in Singapore made significant strides in 2021 by hitting$3.94 billion, with crypto and blockchain funding contributing nearly half at $1.48 billion.
Mercado Libre, a publicly traded retail giant, based in Argentina has injected an undisclosed sum of money into two regional cryptocurrency-focused firms, Paxos and 2TM Group.
Accordingto the company, the funding reinforces its presence in the crypto universe, boosting its development and adoption in the region.
2TM Group is the parent company of MercadoBitcoin.com.br, one of the most prominent digital currency exchanges in the region, and Paxos is a global leader in the crypto space and the current partner of Mercado Libre in the region. With the funding, both companies now have a more prominent backing from one of the region’s biggest conglomerates.
“As a leading technology company, we are actively evaluating the various innovations and opportunities around this market as it evolves, aiming to be a core participant in this disruption. Digital assets and blockchain technology represent a unique, global and collective phenomenon that breaks barriers and create a level, the open playing field for all users to achieve economic empowerment, which is very aligned with our mission as a company,” highlights Andre Chaves, Senior Vice President of Strategy and Corporate Development for Mercado Libre.
As a company that is committed to seeing financial technology grow and evolve in Latin America, the investment marks another major milestone for the company in the core pursuit of its goals. With Mercado Libre now backing local crypto players, it is no longer uncommon for mainstream companies to wade into the digital currency ecosystem.
Paypal Holdings Inc integrated crypto payments in its application back in 2020, a move that opened access to millions of retail merchants to accept Bitcoin and other altcoin payments. The Croatian supermarket chain Konzum Hrvatska also integrated Bitcoin payments back in the fourth quarter of 2021, marking an ambitious move by the company to support the growth and adoption of the nascent asset class.
Is your company ready to buy the Bitcoin dip? Saylor and Dorsey will give you the 411 for free.99. The MicroStrategy World annual conference goes live on February 1st. Learn directly from these two titans of the industry, who have definitely been among Bitcoin’s main proponents and promoters over the last few years.
Michael Saylor has led by example, buying every dip, and is a constant presence in mainstream media. His interviews are more like classes and the attention they get is outstanding. Jack Dorsey, for his part, left Twitter to focus on Bitcoin. Since then, his Block company announced several projects that’ll definitely strengthen the Bitcoin network from every angle.
About the MicroStrategy World conference,the press releasepromises it’ll be “focused on Enterprise Analytics and Bitcoin for Corporations. World 2022 is 100% virtual, and—for the first time ever—access to all sections of the conference is free of charge.” That’s an unbeatable price.
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What Will Saylor And Dorsey Talk About?
The conference has two sides, two different events that showcase MicroStrategy’s duality:
“The Enterprise Analytics event will introduce bold new ways to think about analytics and business intelligence, and showcase organizations who’ve used data as a strategic differentiator. The Bitcoin for Corporations event will explore the various benefits of incorporating Bitcoin into corporate initiatives.”
Join me and Keynote Presenter @jack at the 2nd Annual Bitcoin for Corporations Feb 1 & 2. This free, virtual conference is a must for any corporation considering integrating #Bitcoin with their products & services, or adding #BTC to their balance sheet.https://t.co/V9fIkv633q
— Michael Saylor⚡️ (@saylor) January 20, 2022
As you might expect, NewsBTC will focus onthe second event. It’s important to say that both Dorsey and Saylor’s companies have Bitcoin on their balance sheet. These two put their money where their mouth is, and then some. In any case, what does MicroStrategy World promise?
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“An in-depth discussion on Bitcoin between two visionary voices: Jack Dorsey, CEO of Block, Inc., and Michael Saylor, CEO of MicroStrategy Inc. This session will be followed by a discussion on Bitcoin Treasury with Phong Le (President and CFO, MicroStrategy). Bitcoin for Corporations will also feature live interviews with industry experts from Coinbase, Deloitte, Fidelity Digital Assets, Genesis, Jefferies, NYDIG, Paxos, and Silvergate Bank.”
It’s noteworthy thatFidelity Digital Assets recently shocked the worldby predicting more countries and probably a Central Bank or two would add Bitcoin to their balance sheet in the next few years. Christine Sandler, Fidelity’s Head of Sales & Marketing, will represent the company at the conference.
Saylor ’s Recent Bitcoin History
Since MicroStrategy first added Bitcoin to its balance sheet in August 2020, the company has increased the bet every few months. Theyissued common stock. Theysold stocks. Theybought, andbought, andbought, andbought. In a recent interview, Saylor explained the strategy andNewsBTC reported:
“Look, our long term strategy is kind of like Harvard University. We’re running a university but we have an endowment. MicroStrategy is selling enterprise software. We generate $100 million in cash flow a year – in a good year – and we are reinvesting that cash in our endowment. Our endowment is 100% bitcoin.”
Saylor adds that MicroStrategy plans to acquire and hold bitcoin as a balance sheet. As for the operations, the company will continue to sell its enterprise software everywhere in the world.”
Related to this, about MicroStrategy’s free conference, Saylor said:
“We have gained a wealth of experience and expertise innovating our treasury strategy and evolving our corporate bitcoin acquisition strategy. And we’re pleased to be in a position to share our knowledge—via this curated event—for corporations looking to pursue similar strategies and bold initiatives.”
Dorsey’s Recent Bitcoin History
For his part, Dorsey’s strategy is much different than Saylor’s. He’s working in infrastructure. He’s fortifying the network’s weak parts. Among other things, Block announced they’re buildinga decentralized Bitcoin exchange called tbDEX. Released theLightning Development Kit. And announced they’reworking in an open-source ASIC miner.
On a personal level, Dorsey and rapper Jay-Z put500 BTC in a blind trust to promote Bitcoin developmentin Africa and India. And created theBitcoin Defense Legal Fund to protect developersfrom all kinds of lawsuits.
BTC price chart for 01/21/2022 on Gemini | Source: BTC/USD on TradingView.com
The Price Of Bitcoin
Despite Saylor’s and Dorsey’s efforts, Bitcoin is bleeding. On one hand, Proof-Of-Stake proponents straight up lied before U.S. Congress in a hearing about Proof-Of-Work’s environmental risks. On the other, there’s a rumor that Russia is considering banning Bitcoin in some capacity. Both of those situations caused panic in the market, and Bitcoin’s price is currently 40% lower than the ATH of $69K.
Will Michael Saylor buy the dip?
Featured Image: screenshot from the conference's website | Charts by TradingView