The panic that gripped the stablecoin industry over the weekend has affected Binance. The world’s largest exchange says this morning that it will convert its emergency fund in BUSD to other cryptocurrencies not linked to the dollar. What prompted Changpeng Zhao to make this decision?
Binance turns away from BUSD for its emergency fund
As a reminder, the world of stablecoins was particularly shaken over the weekend, with USDC losing parity with the dollar until yesterday. This morning, Circle’s stablecoin seems to be on the way to really stabilizing since this morning :
Circle’s USDC Nightmare Weekend
The “depeg” surprised the ecosystem… And brought with it other stablecoins, including DAI, USDD and FRAX. This does nothing to help a sector that has already been subject to great mistrust for a few weeks – and which is being scrutinized very carefully by regulators.
Hence a decision from Binance: the platform turns away from its native stablecoin BUSD for the benefit of other “native” cryptocurrencies, at least with regard to its emergency fund intended for the crypto ecosystem. The news was announced early this morning by Changpeng Zhao, the company’s CEO:
Given the changes in stable coins and banks, #binance will convert the remaining of the $1 billion Industry Recovery Initiative funds from BUSD to native crypto, including #BTC, #BNB and ETH. Some fund movements will occur on-chain. Transparency.
— CZ 🔶 Binance (@cz_binance) March 13, 2023
“Given the changes to stablecoins and banks, Binance will convert the rest of its industry emergency fund from BUSD to native cryptocurrencies, including BTC, BNB and ETH.»
CZ also notes that certain movements of funds will be visible “on-chain”, and provides the address in question. The CEO of Binance does not take the opportunity to mention the great adaptability of cryptocurrencies. The company was able to transfer $980 million in minutes, for a fee of 1.29 dollars.
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A disavowal for the BUSD?
Beyond showing the great mistrust that has gripped the stablecoin sector, the maneuver formalizes some disavowal for Binance’s BUSD. The stablecoin, which until then was the pride of the hegemonic exchange, found itself caught in the turmoil when its issuer Paxos was forced to cease activity by the United States Securities and Exchange Commission (SEC) .
As pressure mounts on stablecoins, other players in the ecosystem are considering exit doors. Changpeng Zhao recently believed that the return of algorithmic stablecoins was possible. Former BitMEX CEO Arthur Hayes also touched on the subject recently, proposing a dollar stablecoin that would be entirely based on Bitcoin (BTC).
Because in the end, it is the “big” cryptocurrencies that seem to benefit from this wind of panic. Binance’s decision is particularly symbolic, and shows that one of the biggest players in the market seems to be betting on the stability of BTC and ETH… More than on cryptocurrencies precisely created to be stable. It is therefore probably the beginning of a new era for the ecosystem.
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Source: TradingView – Image: Web Summit via Flickr (CC BY 2.0)
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Journalist at Cryptoast, I fell into the pot of cryptocurrencies a few years ago. I am passionate about the innovative technologies that stem from the blockchain and I like to find the most crispy information to share with you.
Marine Debelloir
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