This week, New York regulators ordered Paxos to stop issuing BUSD stablecoin ( printing new tokens). Support for BUSD is ending. What to do? Is there a replacement for BUSD?
BUSD – Binance stablecoin
BUSD is a Binance stablecoin pegged to the dollar. Now it is in the top 10 cryptocurrencies by capitalization and is one of the three largest stablecoins.
Conspiracy Theory
After the collapse of FTX, US regulators took over Binance and once again provoke FUD around this exchange. First checks related to FTX and Bitzlato, then various rumors, and now BUSD.
Either this is just a coincidence and the SEC as a whole is starting to be more strict about the regulation of the crypto market, or these are targeted attacks on Binance.
What should BUSD users do now?
Nothing terrible happened, BUSD will be supported by Paxos for at least another year, until February 2024. All tokens are fully backed by Paxos reserves.
All users need to find a replacement for BUSD.
It’s better to take your time and do it a bit later, because BUSD is now a little under $1 due to massive selling.
BUSD replacement
The stablecoin BUSD will most likely cease to exist in the next few years if the SEC still recognizes it as a security.
Now there are only 5 reliable and time-tested stablecoins on the market:
4 fully centralized stablecoins
- Tether (USDT) – issued by Tether Limited and Bitfinex
- USD Coin (USDC) – issued by regulated financial institutions Circle and Coinbase
- TrueUSD (TUSD) is a stablecoin from TrustToken, a real asset tokenization platform
- Pax Dollar (USDP) – Issued by the financial institution Paxos, the reserves are insured by the FDIC.
1 decentralized stablecoin
DAI – issued by the MakerDAO protocol and regulated by smart contracts. All Dai tokens are over-collateralized (150%) in the form of cryptocurrencies (mainly ETH, USDC, WBTC, TUSD).
The downside is that DAI is partially backed by USDC. This makes it dependent on Circle decisions. But the team is aware of this problem and they are trying to reduce the share of USDC in providing DAI.
Also, the largest DeFi platforms Aave and Curve Finance may soon issue their own stablecoins that will compete with DAI.
What to choose?
It is better to diversify your funds between different stablecoins for long-term storage of large amounts. For example, you can allocate a portfolio between USDT, USDC and DAI.
In the P2P market, USDT is almost a monopolist, there are no alternatives with such a volume and variety of pairs. Therefore, it is better to use USDT for P2P trading.
On exchanges, USDT has the most liquidity, so you get a fair market price when you exchange.
As you can see, it all depends on the situation. In most cases, you simply cannot avoid USDT and USDC. For active users, USDT is best suited due to its liquidity and prevalence.
I made a handy list in coinmarketcup with the largest stablecoins
Conclusion
BUSD will be supported by Paxos for at least another year, until February 2024. All users need to find a replacement for BUSD. Now there are only 5 reliable and time-tested stablecoins on the market: Tether (USDT) , USD Coin (USDC), TrueUSD (TUSD), Pax Dollar (USDP) and DAI. I advise you to distribute your funds among the first three stablecoins.
Disclaimer: This article is not investment advice. Assess the risks yourself before making any investment decisions.
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