Binance has converted all of the crypto in its $1 billion emergency insurance fund into the stablecoin USDC.
The top global crypto exchange established the “Secure Asset Fund for Users” (SAFU) in 2018 to protect Binance users from “extreme situations.”
The fund has typically attempted to maintain a balance worth $1 billion, though fluctuating crypto prices have impacted the value of its holdings over the years. In late 2022, the fund held $700 million worth of Binance USD (BUSD) and BNB, as well as $300 million worth of Bitcoin (BTC).
Early last year, however, BUSD’s issuer, Paxos, received a “Wells Notice” from the U.S. Securities and Exchange Commission (SEC). In the notice, the regulator stated that it was “considering recommending an action alleging that BUSD is a security and that Paxos should have registered the offering of BUSD under the federal securities laws.”
The New York Department of Financial Services (NYDFS) also ordered the crypto company to freeze production of BUSD, which aims to maintain a peg to the US dollar, and Paxos subsequently announced that it would end its relationship with Binance for the branded stablecoin.
As a result, Binance swapped out the SAFU BUSD holdings for the stablecoins USDT and TrueUSD (TUSD) in March 2023.
Now all of those holdings have been converted to USDC, the second-largest stablecoin by market cap. Binance says the switch “enhances reliability.”
Top US crypto exchange Coinbase and Circle co-created USDC in 2018 and jointly managed the asset through the Centre Consortium until last year.
In August, Coinbase Chief Executive Brian Armstrong and Circle CEO Jeremy Allaire said that Circle would bring all of USDC’s governance and operations responsibilities in-house.
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