Binance, the leading global cryptocurrency exchange, has made a significant change to its $1 billion emergency insurance fund. The fund, known as the Secure Asset Fund for Users (SAFU), was established in 2018 to protect Binance users during unpredictable situations. Previously, the fund held a combination of Binance USD (BUSD), BNB, and Bitcoin (BTC), with a target balance of $1 billion. However, due to the fluctuating prices of cryptocurrencies, the value of the fund’s holdings has changed over time.

In early 2022, the issuer of BUSD, Paxos, received a “Wells Notice” from the U.S. Securities and Exchange Commission (SEC). This notice indicated that the SEC was considering taking action against BUSD, alleging that it should be classified as a security and that Paxos should have registered its offering under federal securities laws. Additionally, the New York Department of Financial Services (NYDFS) ordered Paxos to halt the production of BUSD. Consequently, Paxos announced that it would terminate its partnership with Binance for the branded stablecoin.

As a result of these developments, Binance decided to replace its BUSD holdings in the SAFU with USDT and TrueUSD (TUSD) in March 2023. Now, Binance has completed the conversion of all these holdings into USDC, the second-largest stablecoin in terms of market capitalization. Binance states that this switch will enhance the reliability of the fund.

USDC was co-created by top US cryptocurrency exchange Coinbase and Circle in 2018. The two companies jointly managed the asset through the Centre Consortium until last year. In August, Circle took over all governance and operational responsibilities for USDC.

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