As part of this decision, Binance will no longer support its stablecoin, BUSD, which will translate to the removal of BUSD trading pairs related to XRP and Shiba Inu (SHIB).

As Paxos has halted minting of new BUSD, #Binance will now gradually remove support for the stablecoin on our platform.

BUSD will always remain backed 1:1 by USD, and we continue to support a wide range of other stablecoins.

Find more details below.

— Binance (@binance) August 31, 2023

Read Also: Coinbase Says Stablecoins are not Securities, Condemns SEC Attack on BUSD

Binance Takes a Step Back from BUSD Support

Binance recently declared its intention to gradually phase out its support for Binance USD (BUSD). The decision was prompted by news that the BUSD issuer, Paxos Trust Co., has decided to stop minting BUSD early next year.

This significant development has led Binance to encourage its users to discontinue trading BUSD pairs and instead convert their BUSD holdings to alternative pairs.

While Binance assured users that BUSD will maintain its peg to the US dollar on a one-to-one ratio, the exchange announced that it will cease cashouts of Binance-Peg BUSD on Avalanche, Tron, BNB Chain, Optimism, and Polygon networks in the coming week.

However, Binance will continue to accept BUSD deposits and withdrawals via Ethereum’s ERC-20 network for the time being, with no fixed end date for this support.

Additionally, Binance revealed plans to delist eight BUSD pairs associated with margin accounts. These pairs, including REQ/BUSD, FIDA/BUSD, DASH/BUSD, HOT/BUSD, PORTO/BUSD, AMB/BUSD, HARD/BUSD, and NULS/BUSD, will no longer be available for trading on Binance Isolated and Cross Margin.

Read Also: Crypto.Com Launches Terra Classic (LUNC) Against USDT and BUSD Trading Pairs

Paxos and Regulatory Challenges

The decisions impacting BUSD directly stem from Paxos Trust Co.’s struggles with US regulatory authorities. In February, the Securities and Exchange Commission (SEC) informed Paxos of an upcoming lawsuit, contending that BUSD functioned as an unregistered security.

Since then, BUSD’s position in the market has steadily declined. While it held the position of the seventh largest cryptocurrency in February, with a valuation exceeding $16 billion, it now sits at 23rd place with a significantly reduced valuation.

Binance’s removal of certain trading pairs involving XRP and Shiba Inu due to the declining support for BUSD has generated significant interest within the crypto community. As the platform evolves and regulatory challenges impact various cryptocurrencies, users and market participants closely monitor the outcomes and potential implications.

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The United States Securities and Exchange Commission led by Gary Gensler made the US dollar-denominated stablecoin, BUSD, its next victim after attacking Kraken exchange, claiming that the top U.S. centralized exchange overstepped the securities law. 

On February 9, the financial regulator charged Kraken for not registering the offer and sale of its crypto asset Staking-as–a–Service (SaaS) program, compelling the centralized crypto exchange to pay a sum of $30 million for settlement. 

A few days later, the SEC issued a ‘Wells Notice’ to Paxos, threatening the Binance-branded stablecoin issuer with a lawsuit over BUSD. Subsequently, the New York Department of Financial Services (NYDFS) per a public alert “ordered Paxos to cease minting Paxos-issued BUSD as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance regarding Paxos-issued BUSD”. 

Notably, rumors have it that the SEC is equally planning to crack down on the staking program offered by Coinbase. Unlike Kraken, Brian Armstrong reportedly said that Coinbase would toe the line of Ripple and Brad Garlinghouse and battle with the SEC in court in an event of any securities law violation lawsuit. 

Read Also: Cardano Creator Charles Hoskinson Responds to Critics of His Newly Introduced SEC-Resistant Staking Model

Coinbase Counters SEC Claims on Stablecoins

According to the largest U.S-based centralized exchange, stablecoins are not securities. Brian Armstrong’s Coinbase tweeted this on Wednesday, adding that they know what aspects of BUSD might be of interest to the SEC. 

“Remember, stablecoins are already regulated. Paxos is regulated as a NY Trust Company by NYDFS. USDC is regulated as a stored value instrument, just the same as a simple money order is, under US state money transmitter laws,” Coinbase wrote. 

Coinbase further condemned the SEC’s move on the Paxos-owned BUSD, citing that imposing securities law onto stablecoins would only push crypto innovation away from the United States. Recall that Ripple CEO Brad Garlinghouse revealed that the San Francisco-based cross-border payment firm would move its services away from the United States if they lose in the ongoing XRP lawsuit. 

In addition, the top CEX explained why U.S. regulators must foster stablecoins developments, highlighting the roles of the volatility-resistant crypto asset class in creating a more equitable and efficient financial system. 

Read Also: SEC Sues Do Kwon and Terraform Labs Over TerraUSD (UST) Stablecoin Collapse

Furthermore, Coinbase remarked that dialogue between regulators and the crypto industry’s top players followed by clear rules for the nascent space is the only way the SEC and other regulatory bodies would get it right. 

“This is how we ensure the promise of greater financial accessibility, efficiency, and innovation that safe technology like stablecoins can provide in the US. Not through threats of litigation without explanation or a basis in existing law,” part of the thread read.

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In a Monday statement, Binance, who is also the issuer of BUSD, the third-largest stablecoin said that it is aiming to enhance liquidity and capital efficiency for users. Ultimately, all USDC-related operations across all markets on the exchange will be disabled. 

Part of the announcement wrote;

“In order to enhance liquidity and capital-efficiency for users, Binance is introducing BUSD Auto-Conversion for users’ existing balances and new deposits of USDC, USDP and TUSD stablecoins at a 1:1 ratio. 

“With effect from 2022-09-29 03:00 (UTC), users will trade with a consolidated BUSD balance on the Binance Platform that reflects their balances of these four stablecoins (BUSD, USDC, USDP, and TUSD) post-conversion.

“This will not affect users’ choice of withdrawal: users will continue to be able to withdraw funds in USDC, USDP, and TUSD at a 1:1 ratio to their BUSD-denominated account balance.” 

Read Also: Binance Officially Announces Support for the Abandoned Terra Classic (LUNC) Chain Upgrade

A Stablecoin War? Circle Reacts

The USD Coin (USDC) stablecoin is issued by Centre, a consortium founded by Circle and Coinbase. Commonly known as the digital dollar, USDC has grown to become the second-largest stablecoin by market capitalization and 24 hours trading volume.

The fiat-collateralized stablecoin has also gained a wider adoption from investors as it adopts a more trusted design. 

Although Binance has justified its planned move on USDC, the news has caused a stir in the crypto space. Particularly, Circle company has raised concerns about Binance’s decision to cease support for USDC. 

In response to the impending development, Circle’s spokesperson noted that although the move may be beneficial, it somewhat shows a market conduct inadequacy. 

Read Also: Binance Exchange Set To Enable Zero-Fee Spot Trading For One Ethereum (ETH) Pair: Details

According to Forkast, a representative of Circle wrote in an email, “Based on market activity, it would seem much of this transition has already passed and while optimizing dollar liquidity on the world’s largest exchange may carry benefits, the paradigm does raise potential market conduct questions.”

It is worth noting that USDC ranks higher than Binance’s BUSD in terms of market capitalization and 24 hours trading volume. Per data from Coinmarketcap, USD Coin has a market value of approximately $51.67 billion at the time of writing. While BUSD’s market cap is approximately $19.63 billion.

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As shared by the exchange on its official Twitter handle, users now have SHIB-BUSD as an option on the trading platform. This implies that they are now enabled to swap between the two digital currencies.

Aside from Shiba Inu (SHIB), BUSD has also been activated to pair with Tether (USDT), Solana (SOL), and Dogecoin (DOGE).

Read Also: Veteran Trader Peter Brandt and David Gokhshtein Believe Shiba Inu (SHIB) Has Entered Bull Cycle

Crypto.com announced, “New BUSD trading pairs are now available in the Crypto.com App! Trade $BUSD with $USDT, $SOL, $SHIB and $DOGE now!”

New #BUSD trading pairs are now available in the https://t.co/vCNztATSCO App!
Trade $BUSD with $USDT, $SOL, $SHIB and $DOGE now!

Get the App https://t.co/iIoKFVoiLo pic.twitter.com/X8NSkLc8Wo

— Crypto.com (@cryptocom) August 22, 2022

It should be noted that Shiba Inu (SHIB) officially joined the long list of digital assets on Crypto.com in March 2022. This was one of the listings that boosted the reach and popularity of the digital asset this year.

Shiba Inu (SHIB) Expansion

The listing of Shiba Inu (SHIB) on BitPay, the leading crypto payments processor, has also opened doors of opportunity for the meme token.

The recent BitPay announcement that positively impacted SHIB was related to the availability of Best Buy’s gift cards.

According to the crypto payments processor, holders of digital currencies, such as Bitcoin (BTC), Ethereum (ETH), Shiba Inu (SHIB), and Litecoin (LTC), can now spend their assets with gift cards at “Best Buy”, an American multinational consumer electronics retailer.

Read Also: SHIB Burn: Over 209 Million Shiba Inu Tokens Destroyed in the Past 24 Hours

SHIB in the Market

The digital token SHIB is beginning to experience the reverse of the magnificent price trend it printed a couple of days ago. At the time, it looked like the community was getting it right after employing lots of efforts to keep the digital asset afloat over the past months.

Despite the billions of SHIB tokens already burned via numerous community initiatives, the current unfavorable price trend in the market keeps eclipsing their efforts.

At the time of filing this report, SHIB is trading at $0.00001303, with a relatively 3% price downtrend in the last 24 hours, according to CoinMarketCap. The digital asset has also lost about 18% of its value over the last seven days.

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