Cryptocurrency exchange Binance announced on March 17 that it has replaced BUSD holdings in the Secure Asset Fund for Users (SAFU) with TrueUSD (TUSD) and Tether (USDT). The move comes in response to Paxos’ recent decision to stop minting new Binance USD (BUSD), leading to a decrease in BUSD’s market capitalization over time. 

The Secure Asset Fund for Users (SAFU) is an emergency insurance fund that was established by Binance in July 2018 to protect users’ funds in case of security breaches or other unforeseen events. Binance committed a percentage of trading fees to grow the fund, which was valued at US$1 billion as of January 29, 2022. The fund’s wallets initially consisted of Binance Coin (BNB), Binance USD (BUSD), and Bitcoin (BTC). However, Binance has decided to replace the BUSD holdings with TUSD and USDT.

Binance has assured its users that this change will not impact them in any way, and that their funds will continue to be held in publicly verifiable addresses. BUSD will also continue to be supported on Binance. The exchange also stated that it will closely monitor the fund to ensure that it remains sufficiently capitalized, and will top it up periodically as necessary using its own funds.

On Feb 13, BUSD stablecoin issuer Paxos Trust Company announced that it would halt the issuance of new Binance USD (BUSD) stablecoins due to the ongoing probe by New York regulators. Paxos stopped minting new BUSD tokens starting from Feb. 21, in accordance with the directions and coordination with the New York Department of Financial Services (NYDFS). 

Related: Coinbase disables trading for BUSD

Days after reports of United States regulatory scrutiny of Paxos and Binance USD, Binance minted nearly $50 million worth of TrueUSD (TUSD). The transaction took place on Feb. 16, according to data from Etherscan, and came two days after Binance CEO Chanpeng “CZ” Zhao mentioned in a Feb. 14 Twitter Spaces that Binance would look to “diversify” its stablecoin holdings away from BUSD.

In light of the U.S. Securities and Exchange Commission’s action against Binance’s BUSD, some crypto community members have questioned whether the real issue at hand is about stablecoins or Binance, as the SEC didn’t take action against Paxos’ gold-backed stablecoin called Pax Gold (PAXG.)