Binance’s regulatory woes have put an end to the BUSD adventure on which the platform was betting. The platform recently confirmed the planned end of its stablecoin, and named another asset as its heir. Which is it?
Binance appoints heir to stablecoin BUSD
We already knew that Paxos, the issuer of the BUSD, was to end its foreign exchange programme by February 2024. Today, it is the exchange platform Binance that has confirmed that users will no longer be able to exchange their BUSD by that date:
Binance will gradually stop supporting products linked to the BUSD. Rest assured, however, that the BUSD will always be backed by a 1:1 ratio to the USD. “
The platform is therefore inviting users to exchange their BUSD while there is still time, for one of the other stablecoins present on Binance. And it names one in particular, which it seems to envisage as the successor to the BUSD
Will the FDUSD replace the BUSD?
The exchange explains to its users that they can exchange their BUSD for First Digital USD (FDUSD) free of charge, or directly convert their BUSD into FDUSD at a 1:1 ratio, using Binance Convert. The ‘auto-invest’ service is being maintained, but here too Binance is encouraging investors to configure their plan with alternatives ‘like FDUSD’.
The FDUSD is still relatively unknown, and for good reason: it was launched last June. Issued by First Digital Group, it was only listed on Binance in July. It is therefore particularly noteworthy that Binance is highlighting such a recent stablecoin, which has only just arrived on its listings. As for the company responsible, First Digital Group raised $20 million last year; it is a subsidiary of Legacy Trust Company.
Who is the FDUSD?
Since its listing on Binance just over a month ago, the FDUSD has experienced explosive growth, with trading volume also soaring… So much so that it has prompted astonishment and veiled criticism from Paolo Ardoino, the technical director of competitor Tether (USDT):
Isn’t it interesting that USDt is being pressured down (slightly, within 10bps, just to push market makers to react), and USDc, the main competitor that you would expect to be gaining from the situation, is redeemed heavily nevertheless, while suddenly a competitor born 2 days…
– Paolo Ardoino (@paoloardoino) August 3, 2023
“It’s interesting to see that the USDT is under downward pressure […], and that the USDC, its main competitor […] is also being traded massively. While a competitor born two days ago is picking up everything. It looks completely organic and not at all manipulative… “
The outsider is indeed conquering everything: at the beginning of the month, it went from a capitalisation of $150 million to more than $260 million in the space of two days. The FDUSD is now on the doorstep of the top 10 most capitalised stablecoins, with a capitalisation of $347 million. How far will it go? That will depend in part on how well Binance supports it.