Binance USD (BUSD): A Stablecoin Facing Regulatory Shifts and Market Evolution
September 5, 2025 – Binance USD (BUSD), a prominent stablecoin pegged to the U.S. dollar [2], has been a cornerstone of the cryptocurrency ecosystem since its launch in September 2019. Issued by Paxos in partnership with Binance, BUSD was designed to combine the stability of fiat currency with the efficiency of blockchain technology. However, recent regulatory developments and strategic decisions by Binance have reshaped its trajectory, marking a pivotal moment for the stablecoin and its users.
A Stablecoin Built on Trust and Regulation
BUSD is a fiat-backed stablecoin, meaning each token is backed 1:1 by U.S. dollars held in reserve by Paxos, a regulated blockchain infrastructure platform. These reserves, held in FDIC-insured U.S. banks and U.S. Treasury bills, are subject to monthly audits to ensure transparency and compliance with the stringent requirements of the New York State Department of Financial Services (NYDFS). This regulatory oversight has positioned BUSD as one of the safest stablecoins, offering users confidence in its 1:1 redeemability for USD.
Regulatory Challenges and the End of BUSD Issuance
In February 2023, the stablecoin faced a significant setback when the U.S. Securities and Exchange Commission (SEC) issued a Wells notice to Paxos, suggesting that BUSD was an unregistered security. Concurrently, the NYDFS ordered Paxos to halt the issuance of new BUSD tokens, citing regulatory concerns. This prompted Binance to announce plans to phase out support for BUSD by February 2024, aligning with Paxos’ decision to stop minting new tokens. Users were encouraged to convert their BUSD holdings to other stablecoins, notably First Digital USD (FDUSD), with fee-free conversions offered until October 2023.
By December 2023, Binance had delisted [1] several BUSD trading pairs and ceased support for BUSD in various products, including spot trading, margin trading, and DeFi staking. As of January 2024, withdrawals of BUSD (ERC-20) tokens via the Ethereum network were disabled, and remaining BUSD balances in Binance accounts were automatically converted to FDUSD [3] at a 1:1 ratio. Despite the cessation of new issuance, Paxos has assured users that BUSD remains fully backed and redeemable for USD through at least February 2024.
Market Performance and Current Status
As of September 5, 2025, the price of BUSD remains stable at $1.00, with a 24-hour trading volume of approximately $1.76 million, according to Coinbase. Its circulating supply stands at around 260 million tokens, a significant decline from its peak of $23 billion in 2022. This contraction follows the regulatory halt on new issuance and Binance’s strategic shift toward other stablecoins.
Broader Implications for Stablecoins
The challenges faced by BUSD highlight the evolving regulatory landscape for stablecoins. The SEC’s scrutiny and the NYDFS’s actions underscore the tension between innovation and compliance in the cryptocurrency industry. Meanwhile, the broader stablecoin market is poised for growth, with Standard Chartered predicting a surge to $2 trillion by 2028, driven by potential U.S. legislation like the Genius Act. Stablecoins are also gaining momentum in Asia, where regulators and financial institutions are increasingly embracing blockchain-based assets.
Binance’s pivot to FDUSD and other stablecoins reflects a strategic adaptation to these regulatory pressures. The exchange’s $2.5 million BUSD donation to USA for UNHCR in April 2022 demonstrated the potential of stablecoins for humanitarian aid, but its focus has now shifted to newer assets.
What’s Next for BUSD?
For BUSD holders, the path forward involves converting holdings to alternative stablecoins or redeeming them for USD via Paxos. While BUSD remains a secure and stable asset, its role in the crypto ecosystem is diminishing as Binance and Paxos wind down support. Investors and traders are advised to monitor Binance’s announcements for updates on delistings and conversions, and to explore other stablecoin options for trading and DeFi activities.
BUSD’s journey underscores the dynamic nature of the cryptocurrency market, where regulatory compliance, market demand, and technological innovation shape the fate of even the most established assets. As the stablecoin landscape evolves, BUSD’s legacy as a pioneer in regulated digital currency will remain a significant chapter in crypto history.