Binance, the world’s largest centralized cryptocurrency exchange, has swapped out its BUSD holdings in the Secure Asset Fund for Users (SAFU) fund for TUSD and USDT. BUSD, which is issued by Paxos, has faced enforcement action from the U.S. Securities and Exchange Commission (SEC) and the New York Department of Financial Services (NYDFS), resulting in a significant decline in its market capitalization.
To ensure that assets in SAFU continue to protect users in the long run, Binance decided to swap its BUSD holdings for TUSD and USDT. With Paxos unable to mint new BUSD coins and its market cap dwindling to zero over time, Binance chose to reinforce SAFU assets with alternatives.
Binance’s SAFU Insurance
Binance introduced SAFU in 2018 as an insurance fund to protect user assets, financed by a combination of corporate cash and a share of trading fees. SAFU was valued at $1 billion in January 2022, and it included many crypto tokens such as Binance’s BNB Coin, Bitcoin, TrustToken’s TUSD, and USDT.
The ban on the minting of new BUSD tokens last month resulted in a substantial drop in BUSD’s market cap, prompting Binance to look for alternatives. The exchange stated that the switch would have no effect on users and that the funds would stay on publicly verifiable addresses. Binance will also continue to list BUSD.
TUSD, issued by TrustToken, is a centralized stablecoin created by a smart contract from an off-chain pool of USD reserves held by trust firms. According to Lookonchain analytics data, Binance moved $180 million to escrow accounts last month to produce an identical number of TUSD tokens. TUSD’s reserves are audited by Armanino, a top accounting firm in Europe that also served the collapsed FTX.US in 2020 and 2021.
