BUSD (Binance USD) was a fiat-backed stablecoin collateralized 1:1 with US dollars held in reserve by Paxos Trust Company, and endorsed by Binance as its preferred stablecoin. At its peak in late 2022, BUSD had a market cap exceeding $23 billion, making it the third-largest stablecoin. Following a February 2023 cease-and-desist from the New York Department of Financial Services (NYDFS), Paxos stopped minting BUSD and began winding it down.
| Stat | Value |
|---|---|
| Ticker | BUSD |
| Price | $1.00 |
| Market Cap | $40.00M |
| 24h Change | +0.1% |
| Circulating Supply | 40.03M BUSD |
| All-Time High | $2.58 |
| Contract (Ethereum) | 0x4fab...7c53 |
How BUSD Worked
BUSD operated as a fully-reserved fiat-backed stablecoin:
- 1:1 USD backing: Each BUSD was backed by one dollar held in US-regulated bank accounts or US Treasuries by Paxos.
- Redemption: Paxos honored BUSD redemptions at $1; users could always redeem for USD.
- Regulatory approval: BUSD was one of few stablecoins with full NYDFS approval (until it wasn’t).
- Binance integration: Binance used BUSD for trading pairs, discounts, and internal operations.
The NYDFS Order
In February 2023, NYDFS ordered Paxos to stop issuing new BUSD, citing unresolved issues with Paxos’s risk management and concerns about Binance’s oversight. Separately, the SEC indicated it viewed BUSD as an unregistered security. Following the order:
- Paxos ceased new BUSD minting after February 2023
- Binance began transitioning liquidity to First Digital USD (FDUSD) and TUSD
- Supply has declined steadily as holders redeemed for USD
History
- September 2019 — BUSD launched; first stablecoin with both NYDFS approval and Binance partnership.
- 2022 — BUSD market cap peaks at ~$23 billion; ranked third among stablecoins.
- November 2022 — CoinDesk reports SEC probe into whether BUSD is an unregistered security.
- February 2023 — NYDFS orders Paxos to stop minting BUSD; SEC sends Wells notice.
- 2023 — Supply declines from $16B to under $1B as holders redeem.
- 2024 — BUSD effectively phased out; Binance migrates to FDUSD and USDC.
Common Misconceptions
“BUSD was unsafe because it wasn’t backed.” BUSD was fully backed by Paxos’s regulated reserves — the issue that triggered the NYDFS order was not a backing shortfall but regulatory compliance concerns around Paxos’s relationship with Binance and risk management processes.
“The SEC said BUSD was an unregistered security.” The SEC sent a Wells notice indicating it intended to bring action, but no final determination was made before BUSD was wound down voluntarily.
Criticisms
- The BUSD wind-down exposed how dependent Binance’s ecosystem had become on a single regulated stablecoin issuer.
- The SEC “security” framing for a dollar-backed stablecoin raised concerns about regulatory overreach into stablecoins broadly.
- Stablecoin concentration risk: when BUSD was wound down, it disrupted trading pairs and liquidity across Binance.
Social Media Sentiment
The BUSD wind-down was discussed extensively on r/CryptoCurrency and Crypto Twitter as a signal that US regulators were willing to move against Binance’s ecosystem specifically. Some viewed it as regulatory overreach against an otherwise well-behaved stablecoin; others saw it as appropriate oversight of Binance’s influence over stablecoin markets. The episode accelerated discussion of which stablecoin issuers are “safe” under US regulatory scrutiny.
Last updated: 2026-04
Related Terms
Sources
- CoinGecko — Binance USD (BUSD) — historical market data.
- NYDFS — Paxos BUSD Order (Feb 2023) — official cease-and-mint order.
- Paxos — BUSD Statement — official issuer statement.