Binance will no longer hold BUSD in its Secure Asset Fund for Users (SAFU) and has swapped the stablecoin for ERC-20 TUSD and BEP-20 USDT, according to a March 17 press release.
The world’s largest crypto exchange said the swap was seamless and will not affect users. It also provided the wallet addresses where it is holding the funds.
Binance said the move was necessary following Paxos’ decision to stop minting BUSD — which will result in a gradual market cap reduction.
“This swap is to ensure that assets in SAFU continue to protect users in the long term as the BUSD market capitalization continues to decrease over time.”
BUSD’s peg to the dollar was not affected by the announcement.
The SAFU fund was set up in 2018 and is made up of three wallets that Binance shares publicly. The exchange previously held Bitcoin, BNB, and BUSD in the fund.
The USDT was added to the same address the exchange uses for its BNB SAFU holdings. On-chain data shows the wallet currently holds roughly $450 million worth of BNB and about $100 million in USDT.
Meanwhile, the TUSD wallet shows the exchange is holding $100.3 million worth of the stablecoin.
Based on the SAFU BTC wallet, the exchange currently holds 16,277 BTC in the fund — worth approximately $428 million as of press time.
Paxos and BUSD
New York-based blockchain firm Paxos was the primary issuer of the BUSD stablecoin.
In February, the New York Department of Financial Services (NYDFS) ordered the company to stop issuing the stablecoin, citing oversights in its relationship with Binance.
The regulator said in a statement at the time:
“The Department is monitoring Paxos closely to verify that the company can facilitate redemptions in an orderly fashion subject to enhanced, risk-based, compliance protocols.”
Paxos, in turn, announced that it would adhere to the regulator’s orders and would end its relationship with Binance.
The company is also reportedly facing regulatory action from the U.S. SEC over issuing BUSD as an unregistered security. However, the regulator has not made an official move in the weeks since the NYDFS order.
If the SEC does decide to pursue legal action, it could imply similar consequences for other stablecoins.