BINANCE JOINS FORCES WITH PAXOS TO LAUNCH USD-BACKED STABLECOIN BUSD

Last updated: June 20, 2025, 01:01 | Written by: Gavin Wood

In the ever-evolving world of cryptocurrency, stability is a sought-after commodity.Enter stablecoins, digital assets designed to maintain a consistent value, often pegged to a fiat currency like the U.S. dollar.Back in 2019, a significant partnership emerged with the aim of providing just that: Binance, the world's largest cryptocurrency exchange by trading volume, joined forces with Paxos, a regulated financial institution specializing in digital asset solutions, to launch Binance USD (BUSD).This collaboration marked a crucial step in bridging the gap between traditional finance and the burgeoning crypto space, offering users a reliable and regulated means of transacting and storing value. Official twitter account of Binance recently shared a tweet announcing its partnership with Paxos Global to launch its own USD-pegged stablecoin. InitiallyBUSD was designed as a 1:1 USD-backed stablecoin, meaning each BUSD token was intended to be equivalent to one U.S. dollar, held in reserve by Paxos. Binance, the biggest crypto exchange by volume, and digital asset trust company Paxos announced its partnership to launch a USD-backed stablecoin, which has received approval from the New York State Department of Financial Services.[BREAK] Binance USD available later this monthIn a press release shared with Cointelegraph on Sept. 5, Paxos co-founder and CEO Asia Rich Teo shared that the NYDFSThis peg aimed to provide price stability, making BUSD a potentially attractive option for traders, investors, and everyday users seeking a less volatile cryptocurrency option. A year ago, the New York Department of Financial Services (NYDFS) approved a first-of-its-kind stablecoin - Binance USD (BUSD). BUSD is the first 1:1 US dollar-backed white-label stablecoin that is approved by a regulator. It was developed in partnership by Paxos and Binance, two leaders in digital assets.The partnership, and the resulting stablecoin, garnered significant attention and regulatory approval, setting a precedent for future collaborations in the digital asset landscape.While Paxos no longer mints new BUSD, it initially played a crucial role in bringing this regulated stablecoin to market.

The Genesis of BUSD: A Partnership for Stability

The collaboration between Binance and Paxos was a strategic move aimed at addressing the inherent volatility of cryptocurrencies.Binance, with its massive user base and extensive trading platform, sought a stablecoin that could facilitate easier and more reliable transactions.Paxos, a regulated trust company under the supervision of the New York State Department of Financial Services (NYDFS), brought its expertise in regulatory compliance and asset custody to the table.

The result was BUSD, a stablecoin designed to be transparent, secure, and compliant with regulatory standards. Paxos, a blockchain company, announced Monday that it had been instructed by the New York State Department of Financial Services (NYDFS) to stop issuing BUSD, a Binance-branded stablecoin peggedThe NYDFS approval was a significant milestone, as it provided a level of legitimacy and trust that was often lacking in the early days of the stablecoin market.This regulatory backing distinguished BUSD from many of its competitors and contributed to its rapid adoption.

Key Features and Benefits of Binance USD (BUSD)

BUSD offered several advantages that contributed to its initial popularity:

1:1 USD Backing: Each BUSD token was backed by one U.S. dollar held in reserve by Paxos, ensuring its price stability.
Regulatory Approval: BUSD was approved and regulated by the NYDFS, providing users with a degree of security and confidence.
Transparency: Paxos provided regular audits of its BUSD reserves to ensure that they matched the circulating supply of tokens.
Availability on Binance: BUSD was readily available for trading and use on the Binance platform, making it accessible to a large user base.
Low Fees: Issuance and redemption of BUSD were typically offered with minimal or no fees, making it a cost-effective option for users.

How BUSD Worked: Minting and Redemption

The process of minting and redeeming BUSD was crucial to maintaining its peg to the U.S. dollar.Here's how it worked:

Minting: Users could send U.S. dollars to Paxos, who would then mint an equivalent amount of BUSD tokens. Binance, the biggest crypto exchange by volume, and digital asset trust company Paxos announced its partnership to launch a USD-backed stablecoin, which has received approval from the NewThese new tokens would then be credited to the user's account.
Redemption: Users could send BUSD tokens back to Paxos, who would then burn the tokens and credit the user's account with an equivalent amount of U.S. dollars.

This process ensured that the supply of BUSD always matched the amount of U.S. dollars held in reserve, maintaining the 1:1 peg.The transparency of this system was a key factor in building trust among users. A 1:1 USD-Backed Stablecoin Approved By NYDFS With Paxos.Now, Paxos only allows redemption, not minting.

BUSD's Initial Impact on the Cryptocurrency Market

The launch of BUSD had a significant impact on the cryptocurrency market. Their appointment as Paxos examination provider has been approved by Paxos prudential regulator, the New York Statement Department of Financial Services, as detailed in Section 3 of their Dollar-Backed Stablecoins guidance.It provided traders and investors with a reliable and regulated stablecoin that could be used to:

Reduce Volatility: BUSD allowed users to store value in a less volatile asset, protecting them from the price swings of other cryptocurrencies.
Facilitate Trading: BUSD could be used to quickly and easily move funds between exchanges and trading pairs.
Earn Interest: Some platforms offered interest-bearing accounts for BUSD, allowing users to earn passive income on their holdings.
Make Payments: BUSD could be used to make payments for goods and services, offering a stable and efficient alternative to traditional payment methods.

Within six months of its launch, BUSD surpassed $100 million in total supply and market capitalization, demonstrating its rapid adoption and growing popularity. Today, leading cryptocurrency exchange Binance announced a new partnership with Paxos, a regulated financial institution which digitizes and mobilizes assets. The two firms will launch a USD-pegged stablecoin called Binance USD (BUSD).This growth highlighted the demand for stablecoins in the crypto ecosystem and solidified BUSD's position as a leading player.

The Role of the New York State Department of Financial Services (NYDFS)

The NYDFS played a crucial role in the success of BUSD. Paxos Trust Company (Paxos) is a limited purpose trust company under the supervision of the New York State Department of Financial Services. DFS has ordered Paxos to cease minting Paxos-issued BUSD as a result of several unresolved issues related to Paxos oversight of its relationship with Binance in regard to Paxos-issued BUSD.As the regulator responsible for overseeing Paxos, the NYDFS ensured that BUSD met stringent regulatory standards. Paxos has issued and launched Binance USD (BUSD), a stablecoin pegged to USD, with approval from the New York State Department of Financial Services (NYDFS). BUSD will be available for direct purchase and redemption at a rate of 1 BUSD = 1 USD.This oversight included:

Regular Audits: The NYDFS required Paxos to conduct regular audits of its BUSD reserves to ensure that they were fully backed by U.S. dollars.
Compliance with Anti-Money Laundering (AML) Regulations: Paxos was required to comply with all applicable AML regulations, helping to prevent BUSD from being used for illicit purposes.
Consumer Protection: The NYDFS ensured that Paxos had adequate consumer protection measures in place to protect BUSD holders in the event of insolvency or other unforeseen circumstances.

The NYDFS's rigorous oversight provided users with a high degree of confidence in BUSD, contributing to its widespread adoption and acceptance.

BUSD Trading Pairs and Availability on Binance

Initially, BUSD was available for trading against major cryptocurrencies like Bitcoin (BTC), Binance Coin (BNB), and XRP on Binance.This wide availability made it easy for users to acquire and use BUSD for trading and other purposes.Over time, Binance expanded the number of trading pairs available for BUSD, further increasing its liquidity and utility.

The availability of BUSD on Binance, coupled with its regulatory approval and stable price, made it an attractive option for traders looking to manage risk and capitalize on opportunities in the cryptocurrency market. BUSD is a 1:1 USD-backed stablecoin approved by the New York State Department of Financial Services (NYDFS). It is issued by Paxos in partnership with Binance and can be issued and redeemed without any extra fee. Paxos issues BUSD on the Ethereum blockchain. In addition, Binance offers a wrapped BUSD token (Binance-Peg) on BNB Chain.Binance also incentivized BUSD adoption by offering various promotions and discounts for users who used BUSD to pay for trading fees or other services.

Why Was BUSD Created? Paxos is leading the digital trusts space and we are excited to work with them in developing our native stablecoin, CZ said. Binance Joins Forces With Paxos to Launch USD-Backed Stablecoin BUSD Binance, the biggest crypto exchange by volume,and digital asset trust company Paxos announced its partnership to launch a USD-backedAddressing the Need for Stability

The creation of BUSD stemmed from a clear need within the cryptocurrency market: a lack of stable and trustworthy digital assets.The inherent volatility of cryptocurrencies like Bitcoin and Ethereum made them unsuitable for certain use cases, such as everyday transactions or long-term savings. Last week, Binance announced that it was entering into a partnership with Paxos in order to launch a USD-backed stablecoin called the BUSD.BUSD aimed to address this issue by providing a stablecoin that could be used as a bridge between the traditional financial system and the cryptocurrency world.

By pegging its value to the U.S. dollar and obtaining regulatory approval, BUSD sought to overcome the challenges associated with cryptocurrency volatility and provide users with a reliable and trustworthy digital asset. Later this month, BUSD will be available on the Paxos platform for direct purchase and redemption 1:1 for U.S. dollars and available on Binance.com for trading initially against BTC, BNB and XRP. Paxos will serve as the USD custodian and issuer of BUSD.The partnership between Binance and Paxos was instrumental in achieving this goal, combining Binance's extensive user base with Paxos's regulatory expertise.

The Decline of BUSD: Regulatory Scrutiny and Its Aftermath

While BUSD initially experienced significant success, its journey wasn't without its challenges.In February 2023, the NYDFS ordered Paxos to cease minting new BUSD tokens due to ""several unresolved issues related to Paxos' oversight of its relationship with Binance in regard to Paxos-issued BUSD."" This decision marked a turning point for BUSD and had a ripple effect throughout the cryptocurrency market.

The NYDFS's action stemmed from concerns about Paxos's ability to adequately monitor and control the issuance and distribution of BUSD, particularly in relation to Binance.The regulator also cited concerns about Binance's compliance with anti-money laundering (AML) regulations.This regulatory scrutiny led to a significant decline in BUSD's market capitalization and trading volume.

Impact on Binance and the Stablecoin Market

The cessation of BUSD minting had a notable impact on Binance. All BUSD tokens issued by Paxos Trust have and always will be backed 1:1 with US dollar-denominated reserves, fully segregated and held in bankruptcy remote accounts, Paxos reassured investorsIt forced the exchange to seek alternative stablecoin solutions. BUSD Transparency. BUSD is a stablecoin pegged to the US Dollar (USD) and issued by Paxos with branding support from Binance. It is approved by the New York Department of Financial Services (NYDFS), a regulator known throughout the finance industry for applying exceptionally rigorous standards to the entities and products it oversees.Binance started to promote other stablecoins, such as First Digital USD (FDUSD), and offered incentives for users to convert their BUSD holdings to these alternatives. NOTE: Paxos no longer mints new BUSD, but allows customers to redeem BUSD for USD. Learn more. What is BUSD? BUSD is a USD-backed stablecoin issued by Paxos Trust Company and approved by the New York State Department of Financial Services (NYDFS). All Paxos issued USD-backed stablecoins have 1:1 parity with USD.They even offered zero trading fees for BUSD to FDUSD conversions.

The broader stablecoin market also felt the effects of the BUSD situation.It highlighted the regulatory risks associated with stablecoins and underscored the importance of transparency and compliance. The Binance USD (BUSD) - the US dollar-backed stablecoin made in partnership between Binance and Paxos Trust Company - market cap surpassed $100M for the first time. It has grown to a market cap of more than $115M as of March 11. In the last month alone, BUSD market cap has grown more than 400% - from $22M to $115M.Other stablecoin issuers faced increased scrutiny from regulators, and the industry as a whole became more focused on meeting regulatory requirements.

What Happened to BUSD? A 1:1 USD-Backed Stablecoin Approved By NYDFS With Paxos. BUSD is a 1:1 USD-backed stablecoin approved by the New York State Department of Financial Services (NYDFS) . It is issued in partnership with Paxos and can be issued and redeemed without any extra fee.A Timeline of Key Events

Here's a brief timeline of the key events leading to the decline of BUSD:

September 2019: Binance and Paxos announce the launch of BUSD.
Early 2020: BUSD gains traction and surpasses $100 million in market capitalization.
February 2023: The NYDFS orders Paxos to cease minting new BUSD tokens.
Throughout 2023: Binance encourages users to convert their BUSD holdings to other stablecoins.
Present: Paxos only allows users to redeem BUSD for USD.No new BUSD is minted.BUSD's market cap is significantly reduced.

Navigating the Post-BUSD Landscape: What Options Are Available?

With the decline of BUSD, users are left with several options for managing their stablecoin holdings:

Convert BUSD to other stablecoins: Binance encourages users to convert their BUSD to stablecoins like FDUSD.
Redeem BUSD for USD: Users can redeem their BUSD tokens for U.S. dollars through Paxos.
Explore alternative stablecoins: Numerous other stablecoins are available, each with its own set of features and risks.Research and due diligence are crucial before choosing an alternative.

Alternatives to BUSD: Exploring Other Stablecoin Options

The stablecoin market is constantly evolving, with new projects emerging regularly.Some of the popular alternatives to BUSD include:

Tether (USDT): The most widely used stablecoin, but has faced scrutiny regarding the backing of its reserves.
USD Coin (USDC): A regulated stablecoin issued by Circle, known for its transparency and compliance.
First Digital USD (FDUSD): Promoted by Binance as an alternative to BUSD.
Dai (DAI): A decentralized stablecoin pegged to the U.S. dollar and backed by cryptocurrency collateral.

Each of these stablecoins has its own advantages and disadvantages, and it's essential to carefully consider your individual needs and risk tolerance before choosing one.

Risks Associated with Stablecoins: A Word of Caution

While stablecoins offer a degree of stability compared to other cryptocurrencies, they are not without risk.Some of the key risks associated with stablecoins include:

Regulatory Risk: Regulatory changes can have a significant impact on stablecoins, as demonstrated by the BUSD situation.
Counterparty Risk: Stablecoins are typically issued by centralized entities, which means that users are exposed to the risk of the issuer becoming insolvent or engaging in fraudulent activities.
De-Pegging Risk: A stablecoin can lose its peg to the underlying asset (e.g., the U.S. dollar), leading to significant losses for holders.
Smart Contract Risk: Decentralized stablecoins are often governed by smart contracts, which can be vulnerable to bugs or exploits.

It's crucial to be aware of these risks before investing in stablecoins and to diversify your holdings to mitigate potential losses.

Frequently Asked Questions (FAQs) About BUSD

What exactly was BUSD?

BUSD was a USD-backed stablecoin issued by Paxos in partnership with Binance.It was approved by the NYDFS and designed to maintain a 1:1 peg to the U.S. dollar.

Who issued BUSD?

Paxos Trust Company, a regulated financial institution, issued BUSD.

Is BUSD still being minted?

No, Paxos no longer mints new BUSD tokens as per the NYDFS order. The regulated financial institution that digitizes and mobilizes assets, Paxos Trust Company, and global cryptocurrency exchange and blockchain ecosystem, Binance, today announced its partnership to launch a USD-denominated stablecoin, Binance USD (BUSD), which has received approval from the New York State Department of Financial Services (NYDFS).Paxos now solely allows redemptions of BUSD for USD.

What happened to BUSD?

The NYDFS ordered Paxos to cease minting new BUSD tokens due to regulatory concerns. Paxos no longer mints new BUSD, but allows customers to redeem BUSD for USD or convert their BUSD to USDP.This led to a decline in BUSD's market capitalization, and Binance started promoting alternative stablecoins.

What are my options if I hold BUSD?

You can convert your BUSD to other stablecoins or redeem it for U.S. dollars through Paxos.

The Future of Stablecoins: Lessons Learned from the BUSD Experience

The BUSD story provides valuable lessons for the future of stablecoins. Binance USD (BUSD) is a stablecoin, so its value is pegged to a fiat currency in this case, the US dollar. BUSD was launched in September 2025 as part of a joint partnership between Binance and blockchain and finance company Paxos, headquartered in New York.It highlights the importance of:

Regulatory Compliance: Stablecoin issuers must prioritize regulatory compliance to gain and maintain trust with users and regulators.
Transparency: Transparency in reserves and operations is crucial for building confidence in stablecoins.
Diversification: Users should diversify their stablecoin holdings to mitigate risk.
Resilience: Stablecoin projects should be designed to be resilient to regulatory changes and market shocks.

The stablecoin market is likely to continue to evolve as regulators develop new rules and technologies emerge. Six months after its launch as Binance s official US dollar-backed stablecoin, BUSD has surpassed the $100 million mark for its total supply and market cap. As of March 11, a total of 416 million BUSD has been purchased (also known as minted or tokenized), whether through Binance, Paxos, or the 45 exchanges where BUSD can be purchased and/orThe key to success in this space will be innovation, compliance, and a commitment to protecting users.

Conclusion: BUSD's Legacy and the Evolution of Stablecoins

The partnership between Binance and Paxos to launch BUSD was a significant event in the history of cryptocurrency.It demonstrated the potential of stablecoins to bridge the gap between traditional finance and the digital asset world.While BUSD's journey has been marked by both successes and challenges, it has undoubtedly contributed to the evolution of the stablecoin market.

The BUSD experience underscores the importance of regulatory compliance, transparency, and risk management in the stablecoin space. Convert Your BUSD: Binance encourages users to convert their BUSD to other stablecoins. Notably, Binance offers zero trading fees for users to convert BUSD to First Digital USD (FDUSD) stablecoin. Use Binance Convert: You can manually convert your BUSD balances to FDUSD at a 1:1 ratio using Binance Convert until further notice.As the market continues to mature, these factors will become even more critical for ensuring the long-term viability and success of stablecoins. See full list on investopedia.comThe key takeaways are that regulation is key, due diligence is critical, and the landscape of stablecoins is constantly shifting.Consider exploring other stablecoin options if you haven't already.Stay informed, and always prioritize safety and security in the dynamic world of cryptocurrency.