Coinbase also mentioned that consumers would have the choice to cash out their existing BUSD holdings at any time of their choosing.
The cryptocurrency exchange, Coinbase has made it public (1) that trading in BUSD has been halted on its platform.
We have disabled trading for Binance USD (BUSD). Your BUSD funds will remain accessible to you, and you will continue to have the ability to withdraw your funds at any time. https://t.co/jfpCZX7UTC
— Coinbase Assets (@CoinbaseAssets) March 13, 2023
This action directly results from the prior statement made by firm CEO Brian Armstrong, who stated that the business would delist BUSD.
You may remember that following an internal examination of the asset, Coinbase asserted that BUSD no longer met the criteria necessary to be listed on the exchange.
Armstrong expressed fear that if Paxos stopped minting BUSD, its customers would not be able to access liquidity in the market.
Immediately after that news, traders raced to change their BUSD assets into dollars, which caused a rise in the number of withdrawals that could be made on Binance.
According to information provided by Nansen, there was a net outflow of around $788.5 million from Binance in the first twenty-four hours after the revelation.
Coinbase has informed its customers that they are free to withdraw any BUSD assets they possess at any time, even though the BUSD service has been temporarily suspended.
Paxos has also assured its clients that all of its assets are SAFU. Until February 2024, the company will proceed with processing redemptions for the asset.
The suspension of trading in BUSD is bad news for Binance
Bradley Duke, co-chief executive officer at ETC Group, believes that the Paxos tale does not bode well for Binance. When it comes to maintaining liquidity on its site, especially in regulated markets like the United States, Binance is dependent on BUSD.
Binance recently shifted its focus to using BUSD over other stablecoins, and as a result, most of its trading pairs are now denominated in BUSD.
To reiterate, Binance reserves accounted for about 90 percent of the BUSD market cap of $16.1 billion as of February 14. This represents 22% of the total reserves of Binance.
Binance CEO Changpeng Zhao announced (2) that the company would move away from using BUSD as its primary trading pair after considering the market’s anticipated reaction to the asset.
7/ Binance will continue to support BUSD for the foreseeable future. We do foresee users migrating to other stablecoins over time. And we will make product adjustments accordingly. eg, move away from using BUSD as the main pair for trading, etc.
— CZ ???? Binance (@cz_binance) February 13, 2023
CZ also mentioned that the exchange would keep supporting BUSD soon and that this would not change.
Customers in the United States who use Binance will have a more difficult time using the exchange now that Paxos’s collaboration with Binance has ended.
This is even more true now that NYFDS has taken control of Signature Bank after it was acquired over the weekend.
As stated by the NYFDS, the choice of shutting down Signature Bank was decided because of concerns regarding the potential for systemic risk and in order to protect the people of the United States.
According to CZ, the company would be examining its initiatives in jurisdictions such as the US, where it faces uncertainty over the legal landscape. He said this is done so that “users are protected from any unnecessary injury.”