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What Is Binance Doing After BUSD Ban?

binance announces it will turn to other alternatives after busd ban

Following the SEC’s issuance of a Wells notice to Paxos, the issuer of BUSD, which allegedly violates US securities law, Binance has resorted to using alternative stablecoins. This regulatory action by the United States Securities and Exchange Commission (SEC) compelled them to abandon their native stablecoin for other options.

Binance Announces It Will Turn To Other Alternatives After BUSD Ban

Subsequent to the SEC proclamation, the NYDFS urged Paxos to discontinue issuing new BUSD units. This ruling has caused Binance to search for alternate methods to satisfy its stablecoin needs. According to on-chain information, it appears that this leading crypto exchange is aiming at integrating TrueUSD (TUSD) and promoting some decentralized stablecoins as well – 180 million TUSD were minted from February 16th until 24th alone!

Since June 2019, TrustToken – the operator of TUSD stablecoin, which is pegged to the US dollar – has been collaborating with Binance. This arrangement allowed Binance to acquire and redeem TUSD without any fees. With this rewarding partnership coming full circle in September 2022, Binance changed some of its TUSD reserves into native stablecoin (BUSD) as a part of its effort to increase its market share; however, due to a recent ban on BUSD by certain regulatory bodies, they are now switching back towards creating more new TUSD coins for mitigating further needs related with stablecoins.

what is binance doing after busd ban?

Following the actions taken by U.S. regulators, Binance CEO Changpeng Zhao stated that the cryptocurrency exchange was searching for other options to diversify its stablecoin holdings beyond BUSD. In response, only a few weeks later, Binance declared it would be backing Liquity Decentralized Lending Protocol (LQTY) and introduced TrueFi Perpetual Contracts (TRU). TRU is an uncollateralized loan protocol of the TrueFi decentralized finance system in which its native token can be used on the platform provided by Binance.

Terra Both Popularized And Damaged Stablecoins

Binance’s listing of Liquity and TrueFi tokens caused a sensational surge in their respective values, with each token increasing by 200% within the course of one month. Cointelegraph attempted to contact Binance for an official statement concerning its involvement with decentralized stablecoins but has yet to receive a response as of this moment.

When Terra launched its native stablecoin, TerraUSD (UST), decentralized stablecoins became a trending topic amongst crypto market insiders who believed it would be the next big breakthrough in this space. Unfortunately, when the Earth ecosystem collapse occurred in May 2022, outlooks on UST and other algorithmic-based stable coins quickly shifted. The US Office of Comptroller used this event as proof to demonstrate how these digital assets posed “bank run risk” for investors; subsequent events have shown that even asset-backed tokens are susceptible to minor loss against USD over time.

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