BUSD
Crypto Overview
Overview
BUSD was a regulated, fiat-backed stablecoin that maintained a 1:1 peg with the US dollar, issued by Paxos in partnership with Binance. However, as of February 2023, Paxos was ordered by the New York Department of Financial Services (NYDFS) to stop minting new BUSD tokens. In response to this regulatory action, Binance has announced the gradual phase-out of BUSD.
Purpose and Utility
BUSD was designed to serve as a stable medium of exchange and store of value in the cryptocurrency ecosystem, particularly within the Binance exchange and its associated platforms. Each BUSD token was backed by actual US dollars held in FDIC-insured bank accounts and US Treasury bills.
Business Model and Operation
The stablecoin operated through a regulated framework where Paxos maintained full reserves backing each token. Users could redeem BUSD directly for US dollars through Paxos, ensuring transparency and stability in the token's value.
Current Status
Following the NYDFS directive, Paxos will continue to manage the redemption of existing BUSD tokens until at least February 2024, and Binance is actively supporting users in transitioning to alternative stablecoins. The circulating supply has been steadily decreasing as users redeem their tokens.
Platform Usage
Despite the ongoing phase-out, BUSD continues to facilitate trading and transactions within the cryptocurrency ecosystem, particularly on Binance's platform, though with diminishing volume as users transition to alternatives.
Crypto Impact
To assign a comfort level investing in BUSD from a halal perspective we need to determine whether it has a net positive or negative impact.
Towards this end, the table below is used to tally all the positive and negative considerations our members can think of related to BUSD.
If you don’t see something that should be listed, positive or negative, feel free to submit your own contribution using the button “Contribute”.
We will review your contribution for accuracy before publication.
Importantly, you can review listed contributions and vote on which one you think has the greatest impact, positive or negative.
You only have one vote per asset so use it wisely.
You can change your vote if you change your mind.