Cryptocurrency exchange Binance announced on March 17 that it has replaced Binance USD Holds its Secure Asset Fund for Users (SAFU) with TrueUSD (TUSD) and Tether.The move comes in response to Paxos’ recent move to stop minting new BUSD, which caused the asset’s market cap to drop.
SAFU is an emergency insurance fund established by Binance in July 2018 to protect users' funds in the event of a security breach or other unforeseen events. Binance pledged to take a percentage of transaction fees to grow the fund, which will be worth $1 billion as of January 29, 2022. SAFU's wallet initially consisted of BNB, Bitcoin and Binance USD - now replaced by TUSD and USDT.
Binance assured users that this change will not affect them, their funds will continue to be held in publicly verifiable addresses, and BUSD will continue to be supported. The exchange added that it will closely monitor the fund to ensure it is well-capitalised and, if necessary, replenish it regularly with its own funds. On February 13, Paxos Trust Company, the issuer of BUSD, announced that it would stop issuing new BUSD starting February 21, in accordance with the direction of and in coordination with the New York Department of Financial Services.
Binance minted nearly $50 million worth of TUSD just days after reports surfaced that U.S. regulators were reviewing Paxos and BUSD. According to data from Etherscan, the transaction took place on Feb. 16, two days after Binance CEO Changpeng Zhao mentioned in a tweet on Feb. 14 that Binance would be looking to “diversify” its stablecoins Holdings, not BUSD.
With the SEC also taking action against BUSD, some members of the crypto community have questioned whether stablecoins are the real issue at hand, or if it really has anything to do with Binance given the SEC’s lack of action on Paxos’ gold-backed stablecoin, Pax Gold (PAXG).
