Binance delists its stablecoin BUSD

Binance launched its stablecoin BUSD (Binance USD) in 2019.

However, it was not a stablecoin actually issued by the exchange, but issued by Paxos under license. 

In February of this year, Paxos had issues with the SEC regarding Binance’s stablecoin, to the point of deciding not to issue any more BUSD tokens.

Both Paxos and Binance themselves have decided to close the BUSD project, only returning dollars to those who returned their BUSD tokens.

The decline of BUSD, Binance’s old stablecoin

It should be noted that BUSD has never actually lost its value, as the price has always remained close to $1. 

There have been problems since 2020, when it was still decidedly not widespread, but starting from the end of 2020, with the beginning of the last major bull run, it has never lost its peg with the dollar. 

The problems, therefore, were not of a technical or financial nature, but only regulatory. It is more or less similar to what happened to Binance itself this year with the US Department of Justice. 

Initially, the market capitalization of BUSD was less than $200 million, but with the start of the latest major bull run, it skyrocketed very quickly. 

Already in January 2021 it had risen above one billion, and in June of the same year it also rose above 10 billion. 

With the burst of the speculative bubble, at the beginning of 2022, the market capitalization of BUSD skyrocketed to over 18 billion, and the peak occurred in November of last year, shortly after the failure of FTX, reaching 23 billion. 

Later it fell below 17 billion dollars at the beginning of 2023, but from February onwards it has slowly collapsed. 

The collapse of circulating supply

In fact, when Paxos decided to stop issuing BUSD tokens, its circulating supply inevitably started to decrease. 

The fact is that the returns of BUSD tokens to Paxos have obviously continued, and even increased, while on the other hand new issuances have been definitively suspended. 

Already in March, the market capitalization of BUSD had fallen below 8.5 billion dollars, and in June it also fell below 4.5 billion. 

Currently it is even less than 1.7 billion, and obviously it is still decreasing. Moreover, with the delisting from Binance BUSD, it is practically destined to disappear completely. 

Note that the current level is still in line with that of February 2021, so it will most likely decrease further, at least below $700 million by the end of 2020. 

It should be noted, however, that the price remains the same, so no one is losing out. All BUSD holders can continue to redeem their tokens in exchange for an equal amount of dollars or other stablecoins. 

Delisting

However, delisting from exchanges removes the possibility of easily selling BUSD tokens, for example in exchange for other stablecoins or cryptocurrencies. 

When it will no longer be possible to trade BUSD on exchanges, there will be only one way to exchange them: returning them to Paxos. 

The problem is that in February of next year, which is in a few months, Paxos will also stop converting BUSD into dollars for those who want to return them to the sender, so we need to hurry to return or convert them all.

However, it is not certain that decentralized exchanges will completely delist BUSD. The problem, however, is that without the possibility of returning them to the issuer in exchange for dollars, they could lose the peg with the dollar. 

So it’s better to return them immediately, before Paxos permanently interrupts the returns. 

Binance officially will cease support for all its products related to BUSD on December 15th.

Currently, in addition to Binance, BUSD has market only on Uniswap and especially on PancakeSwap, which are CEX that could also end up not delisting it. However, the risk of losing the peg with the dollar after the end of the refunds on Paxos is high. 

Binance advises its users to convert their BUSD into other available assets before 15/12/2023, and specifically suggests exchanging it with the stablecoin FDUSD, for which it has temporarily suspended trading fees. 

Starting from December 31st, Binance will also disable withdrawals in BUSD, automatically converting any remaining BUSD into FDUSD.