Binance Converts $1 Billion BUSD to Bitcoin/Ethereum/BNB After USDC De-pegg

Photo by Andrey Metelev on Unsplash

Stablecoins are coming under increasing pressure due to the current crisis, which has witnessed the failure of three large cryptocurrency-backing institutions in the previous few days.

Binance has begun changing the remaining portion of its one billion dollar industry recovery funds into other crypto assets as a direct reaction to the latest collapse of at least three prominent banking firms based in the United States.

 

Binance will be exchanging BUSD funds for Bitcoin and other cryptocurrencies

Given the present situation, which has witnessed the failure of three large crypto-backing institutions in the past few days, Binance CEO Changpeng Zhao believes that the pressure put on stablecoins will only continue to increase.

Silicon Valley Bank (SVB), Silvergate Bank, & Signature Bank are only some financial companies that have failed.

The decision made by Zhao comes at a time when the failure of these major banks will immediately affect the market for stablecoins.

For instance, Circle’s USDC stablecoin lost its link to the US dollar, dropping to a low of $0.87 relative to its $1 benchmark.

And considering that Binance’s Industry Recovery Initiative Fund is based on BUSD, another stablecoin, Zhao’s logic looks straightforward and easy to understand.

According to his post, the remaining BUSD funds are going to be changed into cryptocurrencies such as Bitcoin (BTC), Binance Coin (BNB), and Ethereum (ETH).

The chief executive officer also posted links (1) that revealed the flow of payments and the destination location in an effort to maintain transparency.

 

Industry Reactions on the Move

On Twitter, members of the cryptocurrency community have expressed a range of opinions in response to the move made by Binance. Some people think that the action is praiseworthy and illustrates that Binance is the kind of company that takes the initiative.

Also, a user who goes by the name Vipul interpreted it as an attempt by Binance to assert itself as a crypto power once more.

On the other hand, many disagree with the choice. This group believes that converting BUSD, which is intended to be a stablecoin, into assets that are known to have a higher degree of volatility is absurd.

Nonetheless, there is still a sense of unpredictability surrounding stablecoins despite what has been said.

To begin, it has been established through several sources that the bankrupt SVB had around $3.3 billion worth of Circle’s USDC tokens. Also, the leading stablecoin has an unspecified sum of reserve funds trapped in Silvergate, another bank that failed not too long ago.

So, it is comprehensible why other stablecoins, such as DAI, USDD, and FRAX, have also drifted away from their position of being equal to $1 even though USDC has lost its peg.

In addition, numerous crypto-friendly banks have recently declared bankruptcy, raising the question of whether any financial firms will be left to finance crypto.

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