In today’s post, you will be learning how to convert BUSD to FDUSD.

It is no longer news that Binance is phasing out BUSD and will no longer support it from February 2024.

This is because of the new kid on the block – FDUSD!

I will show you how to convert BUSD to FDUSD for free in the next section.

Let’s dive in.

How to Convert BUSD to FDUSD at Zero Fees

There are 2 ways you can do this.

i. Convert Feature

To convert FDUSD to BUSD, follow these steps:

Step 1

Go to Binance and click on ‘Convert’

Step 2

Select BUSD for FDUSD 

Step 3

Click ‘Preview Conversion’ to view the details of your conversion.

Step 4

Click ‘Convert’ to convert your BUSD to FDUSD. 

Note that I had converted my BUSD earlier, hence the reason the ‘Convert’ option is not showing.

Your BUSD will be converted to FDUSD at a one-to-one ratio at zero fee. 

You can send this to Simple Earn for a 12.6% APR. 

ii. Do Nothing

Yeah, you read right… do nothing!

All your BUSD will automatically be converted to FDUSD on the 1st of February 2024. 

Here you have the ways to go about changing your BUSD to FDUSD.

But it still begs the question:

Why phase out BUSD for FDUSD in the first place? 

Let’s talk about that in the subheading below.

Why Change BUSD For FDUSD?

It’s these two things; Politics and Money.

Or better said:

1. The US government and 
2. The lucrative business of stablecoin.   

Let me explain further.

BUSD used to be the third largest stablecoin, coming behind USDT and USDC, with a market cap of over 23 billion USD at its peak. 

It was issued by Paxos, a company based in New York for Binance. 

It was also authorised and regulated by the New York State Department of Financial Services. 

So everything was good. 

Until  February 2023, SEC issued a Wells Notice to Paxos stating that BUSD is an unregistered security. 

A Wells Notice is simply saying we are going to take enforcement action, we are giving you 30 days to reply. 

Before Paxos could make a response, the New York State Department of Financial Services ordered Paxos to stop minting BUSD and that began Binance phasing out BUSD. 

So why didn’t Binance switch full support to USDT or USDC?

It’s simple because of number 2 the lucrative business of stablecoin

How does this work?

BUSD is a fiat-backed stable coin, same as USDT and USDC. 

The issuer e.g. Paxos takes your dollars and puts them in a bank account, and mints an equal amount of stablecoin on the blockchain.

When ever you want your dollars back, they destroy the stablecoin and give your real dollar back. 

But the thing is that not many people want their real dollars back. They want to spend, stake, lend and trade it. 

And the dollar collected by the issuer is not all sitting in the back account; a good portion of it is put into government bonds and other assets to yield interest. 

Let me give you an example:

The US treasury bond yields about 4.5% per annum.

If we look at the 23 billion market cap of BUSD at its peak, that is over $ 1 billion in profit for that year.

Even if they had half of this in bonds, that is still over half a billion dollars in profit. 

As a matter of fact, Coinbase co-issues USDC with Circle and it is their second-highest source of revenue. 

Which begs the question why wasn’t Circle and Coinbase US-based companies issued a Wells Notice for USDC. 

So what SEC did was that it succeeded in taking that business away from Binance.

Or did they? 

Because Binance is now giving full support for FDUSD, a US-backed stables coin that launched in July and issued in Hong Kong by First Digital Labs. 

So they more like continued this business outside of US.

This is all there is to know about the Binance’s switch from BUSD to FDUSD.

Let me know in your opinion who you think is winning this one in the comment section. 

Give this post a share on your favourite SM platform.

Till my next post, hodl on… WAGMI!