BUSD, short for Binance USD, is a stablecoin pegged to the value of the U.S. dollar. It was launched in September 2019 through a partnership between Binance (Binance), the world’s largest cryptocurrency exchange, and Paxos Trust Company, a financial institution regulated by the New York State Department of Financial Services (NYDFS).The primary goal of BUSD is to provide the cryptocurrency market with a stable, reliable, and regulated digital asset to counteract the high volatility of other cryptocurrencies.
Features and Mechanism of BUSD
- Pegged to the U.S. Dollar: The value of BUSD is pegged to the U.S. dollar at a fixed 1:1 exchange rate, meaning 1 BUSD is always equal to 1 U.S. dollar.
- Issuance and Reserves: BUSD issuance is based on a collateralization mechanism. When users or institutions wish to obtain BUSD, they send U.S. dollars to Paxos in exchange for BUSD at a 1:1 ratio. The deposited U.S. dollars are held in a regularly audited bank account to ensure that BUSD in circulation is always backed by sufficient funds. Paxos publishes a monthly notarized audit of BUSD’s U.S. dollar reserves to enhance transparency.
- Regulatory Compliance: BUSD (ERC-20 BUSD) issued on the Ethereum blockchain is managed by Paxos and is strictly regulated by the New York State Department of Financial Services (NYDFS). The NYDFS is known for its strict regulatory standards, requiring Paxos to ensure that the stablecoin is fully backed by collateral and to control its issuance and redemption.
- Two Forms: Technically, BUSD exists in two main forms. One is the native ERC-20 BUSD minted directly by Paxos on Ethereum, which is regulated by the NYDFS. The other is the “Binance” (Binance-Peg) BUSD offered on other blockchain networks such as BNB Chain,Avalanche, and Polygon, among other blockchain networks, via the “” (Binance-Peg). Its value is backed by an equivalent amount of ERC-20 BUSD locked as reserves.
Common Uses of BUSD
Before BUSD ceased issuance, it played multiple roles in the cryptocurrency ecosystem:
- Trading: BUSD serves as a trading pair, allowing traders to quickly and conveniently transfer funds between different assets while avoiding the volatility of other cryptocurrencies.
- Decentralized Finance (DeFi): BUSD is used in various decentralized finance applications, such as lending and providing liquidity, serving as a reliable source of collateral for DeFi protocols.
- Remittances and Payments: BUSD can be used for international money transfers and as a payment method in e-commerce transactions, providing users with a stable exchange rate.
- Savings and Investment: For those looking to save or invest, BUSD serves as a stable store of value—a low-volatility asset option that can be used to diversify investment portfolios.
How to Obtain BUSD? (Current Status and Historical Methods)
Given BUSD’s current status, the methods for acquiring it have undergone significant changes.
Current Status: Issuance Halted and Phased-Out
In February 2023, the New York State Department of Financial Services (NYDFS) directed Paxos Trust Company to cease issuing new BUSD tokens. Subsequently, the U.S. Securities and Exchange Commission (SEC) also issued a notice to Paxos, stating that BUSD may be an unregistered security. Consequently, Paxos ceased minting new BUSD tokens on February 21, 2023. Paxos still allows customers to redeem BUSD for U.S. dollars or convert it to Pax Dollar (USDP).
Binance It has also announced that it will gradually phase out support for BUSD and recommends that users convert their BUSD to other stablecoins, such as FDUSD, USDT, or USDC. Binance suspended all BUSD withdrawals on January 2, 2024, and any remaining BUSD balances in accounts will be automatically converted to FDUSD.
Historical Acquisition Methods (Prior to the End of Issuance):
Before the issuance was halted, users could obtain BUSD through the following methods:
- Purchase via cryptocurrency exchanges: Users could purchase BUSD on cryptocurrency exchanges such as Binance (Binance) using fiat currency (such as the U.S. dollar) or other cryptocurrencies (such as USDT, BTC, ETH, etc.). Platforms like Svmuu also provided market data.
- Exchange directly with Paxos: Institutions and individuals could send U.S. dollars directly to Paxos to receive BUSD at a 1:1 ratio.
- Participate in campaigns or rewards: Some platforms may offer BUSD through sign-up bonuses, referral rewards, “learn and earn” campaigns, or airdrops.
The Impact of BUSD’s Delisting
The delisting of BUSD is one of the largest orderly delistings in the history of stablecoins. Although the delisting process lasted 18 months, the price of BUSD remained within the range of $0.998–$1.002, and redemption channels remained open throughout, making it a relatively smooth exit for holders. This event also accelerated the wave of stablecoin regulatory legislation in 2023–2024, highlighting the U.S. government’s increasing scrutiny and regulation of the cryptocurrency market. For more cryptocurrency market news and coverage, follow Svmuu.
