Binance Ends Support for Paxos-Based BinanceUSD_ Shifts Focus to Embrace New Stablecoin: Details Inside

Binance is encouraging its users to convert their holdings of Binance USD (BUSD), a stablecoin valued at $1.00, into other available assets. This includes a recently introduced stablecoin. This move is part of Binance’s strategy to phase out its support for BUSD

According to an announcement, the exchange confirmed previous speculations regarding its intention to gradually withdraw support for BUSD by February 2024. This decision aligns with Paxos’ plans to cease BUSD redemption at the same time. Notably, this official statement marks the first time Binance has addressed this matter after several users shared screenshots of a notification on their mobile app regarding the planned suspension of support.

FYI: Binance will stop BUSD in 2024🪙

According to an official announcement on crypto exchange Binance’s app, the exchange pops up a notification for users that they will stop supporting BUSD in 2024.

This is an elignment with Paxos phase out for purchasing BUSD by February… pic.twitter.com/XiRPy71b3p

— Nu Brave (@NuBraveIN) August 30, 2023

Binance’s statement urges its users to trade or transform their BUSD holdings into First Digital USD (FDUSD). The Hong Kong-based trust company First Digital Group introduced FDUSD, a stablecoin, in June, and it initially appeared on Binance’s listings in late July.

The exchange has introduced fee-free trading and conversions between BUSD and FDUSD. On August 30th, it removed eight trading pairs involving BUSD. Before this, Binance had incentivized users to use BUSD by offering zero-fee trading pairs for FDUSD paired with Bitcoin (BTC) at $26,003 and Ether (ETH) at $1,646.

Binance’s decision to discontinue its support for BUSD seems to be influenced by actions taken by the United States Securities and Exchange Commission (SEC) on February 13th. The SEC had alleged that BUSD was an unregistered security in a notice it issued to Paxos on the same day. Simultaneously, the New York Department of Financial Services ordered Paxos to cease the issuance of BUSD.

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Additionally, Binance Labs is launching a new platform called ColLabs, focusing on Web3 founders, builders, and investors. The primary goal of ColLabs is to simplify venture capital operations, facilitate knowledge sharing, and foster professional networking. It builds upon Binance Labs’ ongoing efforts in incubation and guidance, specifically catering to the mentoring and funding needs of the Web3 sector. It offers unique resources like tailored educational content and event access.

However, there have been concerns raised about its accessibility because of the exclusivity associated with these resources. The platform also provides carefully vetted investment opportunities from Binance Labs’ portfolio. While this could streamline due diligence for investors, some critics fear it might direct investments primarily toward Binance-related projects, potentially limiting diversity in the Web3 venture landscape.

For companies already affiliated with Binance Labs, ColLabs plans to introduce additional co-creation and growth platforms. While this could benefit those startups, questions arise about whether the platform will remain open for diverse Web3 projects or predominantly serve those within the Binance eco.

ColLabs also intends to offer ious content through blogs and newsletters. While content sharing is generally advantageous for community building, the exclusivity of certain channels, such as an invite-only Telegram group, raises concerns about the breadth of information dissemination.

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