Binance Replaces BUSD in SAFU Fund with TUSD and USDT

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Binance Cryptocurrency Exchange announcement on March 17, it replaced BUSD holdings in the Secure Asset Fund for Users (SAFU) with TrueUSD (TUSD) and Tether (USDT). This move comes in response to Paxos’ recent decision to stop minting new Binance USD (BUSD), causing the market capitalization of BUSD to decrease over time.

The Secure Asset Fund for Users (SAFU) is an emergency insurance fund that was established by Binance in July 2018 to protect user funds in the event of security breaches or other unforeseen events. Binance incurred a percentage of trading fees to grow the fund, which was valued at US$1 billion as of January 29, 2022. The fund’s portfolios initially consisted of Binance Coin (BNB), Binance USD (BUSD) and Bitcoin (BTC). However, Binance has decided to replace BUSD holdings with TUSD and USDT.

Binance has assured its users that this change will have no impact on them and that their funds will continue to be held at publicly verifiable addresses. BUSD will also continue to be supported on Binance. The exchange also said that it will closely monitor the fund to ensure that it remains sufficiently capitalized and will periodically top it up if necessary using its own funds.

February 13, BUSD stablecoin issuer Paxos Trust Company has announced that it will stop issuing new Binance USD (BUSD) stablecoins due to the ongoing investigation by New York regulators. Paxos stopped minting new BUSD tokens from February 21, following instructions and coordination with the New York Department of Financial Services (NYDFS).

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Related: Coinbase disables trading for BUSD

A few days after reports on the US regulatory review of Paxos and Binance USD, Binance minted nearly $50 million worth of TrueUSD (TUSD). The transaction took place on February 16 according to Etherscan data, and came two days after Binance CEO Chanpeng “CZ” Zhao mentioned in a February 14 Twitter space that Binance would be looking to “diversify” its stablecoin holdings away from BUSD.

In light of the United States Securities and Exchange Commission’s action against Binance’s BUSD, some Members of the crypto community wondered if the real problem was with stablecoins or Binanceas the SEC failed to take action against Paxos’ gold-backed stablecoin called Pax Gold (PAXG.)