In a surprising turn of events, Binance has announced that it’s closing down its Binance USD (BUSD) lending services. This move, scheduled for October 25, is part of a planned termination of BUSD support by 2024.
Before this decision, BUSD was considered among the largest stablecoins with its peak market capitalization soaring at $23 billion in November 2022. As of now, however, it’s seen a significant drop to $2.23 billion at the time of writing.
Previously, in February this year, New York-based fintech firm Paxos, the issuer of the BUSD stablecoin, had decided to cut ties with Binance due to the latter’s ongoing litigation with the U.S. Securities and Exchange Commission. Paxos stated it would cease redemptions from BUSD to underlying U.S. cash and Treasuries by February 2024 and halted the new minting of BUSD indefinitely.
Users interested in lending their BUSD on Binance could expect an estimated annual percentage yield of 3%. Now, even though BUSD lending and borrowing services will be discontinued, users can continue to borrow and lend on Binance using other stablecoins such as Tether, Dai, TrueUSD (TUSD), and USD Coin.
It seems clear that Binance’s decision to wind down BUSD activities is a major blow to its users. BUSD was convenient and allowed users to earn passive income by lending. Now, they are urged to convert their BUSD balances into fiat or other cryptocurrencies by next year.
On the flip side, the termination of BUSD might not be a formidable issue for the Binance users due to the availability of alternative lending coins. The remaining options of Tether, Dai, TUSD and USD Coin still give the users necessary leverage in the market.
Adjusting to the changing conditions might take some time on the users part. However, skeptics might argue that this is simply a veil covering some systemic instability facing Binance. Yet, as we continue to observe the evolving crypto-market, it becomes clear – only time will tell if Binance’s bold move was a step in the right direction or a downfall.
For now, let us watch and perhaps, learn. Only through these constant transitions can we truly appreciate the rapidly evolving nature of this excitingly unpredictable crypto market.
Source: Cointelegraph
