Binance to withdraw about $1 billion from stablecoins

Binance will withdraw from the BUSD stablecoin assets from its Industry Recovery Initiative (IRI) crypto industry assistance fund, to which the company previously sent $1 billion. informed head of the stock exchange Changpeng Zhao. The remaining funds in the fund will be converted into cryptocurrencies such as Bitcoin, Ethereum and BNB. RBC Crypto.

Binance announced the creation of a fund to help crypto projects in November 2022 after the collapse of FTX. Other crypto companies such as Jump Crypto, Polygon Ventures, Aptos Labs, Animoca Brands, GSR, Kronos, and Brooker Group have also joined this initiative. Changpeng Zhao’s platform sent $1 billion in BUSD stablecoins to this fund.

In early February, as part of the IRI, Binance acquired a controlling stake in the Korean crypto exchange Gopax, while the transaction amount was not disclosed. Also, the media, citing Binance co-founder Yi Hee, reported that the fund was promoting relatively large deals with two more trading platforms.

After reporting the withdrawal of assets from BUSD, Zhao shared link on the transaction and noticed that the transfer of funds in the amount of more than $980 million was completed in 15 seconds and cost only $1.29.

The reason for the decision to leave BUSD, Zhao cited problems in the field of stablecoins, which began with the cessation of the issuance of a stablecoin under the Binance brand, as well as the closure of banks that worked with cryptocurrency platforms.

In February, the New York State Department of Financial Services (NYDFS) banned the issuance of new Binance USD (BUSD) tokens on the basis that their issuer, Paxos, could not issue these tokens “safely and securely.”

After the ban on the release of BUSD, the head of Binance admitted that the capitalization of the asset will now only fall and the exchange foresees that users will switch to other stablecoins. The market capitalization of BUSD after the ban fell by $5 billion in two weeks. Binance Chief Strategist Patrick Hillmann, in an interview with Forbes, has already spoken in plain text about the impending death of the BUSD stablecoin, which, according to him, turned out to be “virtually destroyed by American regulators.”

Last week it became known about the closure of three banks focused on the cryptocurrency sector: Silvergate Bank, Silicon Valley Bank (SVB) and Signature Bank. They carried out operations to convert cryptocurrencies into US dollars for crypto exchanges, and $3.3 billion from USDC stablecoin reserves were blocked in SVB.

The sudden closure of banks had a negative impact on stablecoins, in particular on USDC and DAI – the price of the second largely depended on the first, since its reserves were provided by them by almost half. The tokens lost their peg to the US dollar, dropping in price to $0.88. On March 13, both stablecoins began to restore their peg to the underlying asset.