Binance, the world’s largest cryptocurrency exchange, has announced plans to terminate its support for its native BUSD stablecoin by 2024, urging users to convert their tokens to other crypto assets. This significant development was first revealed via a pop-up notification on the exchange’s mobile app. The notification specified that Paxos Trust Company, the issuer of BUSD, would cease the stablecoin’s redemption by February 2024. This decision comes in the wake of escalating regulatory pressure on BUSD throughout 2023, which has already led to a substantial decline in its market share.

Furthering its phased withdrawal from BUSD, Binance also disclosed its intention to delist eight BUSD trading pairs by September 7. This action is directly linked to the broader plan to fully discontinue support for the stablecoin in the coming year. In a detailed blog post, Binance outlined the cross-margin and isolated trading pairs slated for delisting, which include AMB/BUSD, DASH, FIDA, HARD, HOT/BUSD, NULS/BUSD, PORTO/BUSD, and REQ/BUSD. Additionally, the IOST/BTC margin trading pair will also be removed.

The delisting process is structured in two distinct stages. The first stage commenced on September 1, 2023, at 06:00 (UTC), with the suspension of all isolated margin borrowing for these specific pairs. The subsequent and final stage will occur on September 7, 2023, at 06:00 (UTC). On this date, Binance will automatically close all users’ open positions, terminate any pending orders, and initiate an automatic settlement before delisting these pairs from both its isolated margin and cross-margin markets. Users have been strongly advised to close all open positions and transfer their assets from margin wallets to spot wallets prior to September 7 to mitigate any potential losses, as modifications to trading positions will be prohibited during the delisting procedure.

Binance and BUSD have been under intense regulatory scrutiny throughout the year. A notable instance occurred in February when the New York Department of Financial Services (NYDFS) ordered Paxos to cease BUSD issuance, citing “several unresolved issues related to Paxos’ oversight of its relationship with Binance regarding Paxos-issued BUSD.” Following this, the United States Securities and Exchange Commission (SEC) issued a Wells Notice to Paxos Trust Co., alleging that BUSD was an unregistered security investment contract, further compounding the regulatory challenges.

These unfavorable regulatory developments have had a profound impact on BUSD’s market performance. The stablecoin’s market capitalization has plummeted by over 80% since February, dropping from $16.13 billion on February 9 to its current value of $3.07 billion, according to Coinmarketcap data. This drastic decline has also seen BUSD fall from occupying the sixth position in market capitalization in February to the 23rd spot, reflecting a loss of approximately $13 billion in just six months and a significant erosion of investor appeal.