BUSD

Binance has introduced a new stablecoin, BFUSD, with an annual percentage yield of 19.55%. The stablecoin is designed to appeal to crypto users seeking passive income.&nbsp;
The total supply of BFUSD is capped at 20 million tokens, and the <a href="https://crypto.news/tag/stablecoin/" target="_blank" rel="noopener noreferrer nofollow">stablecoin</a> operates with a collateralization ratio of 105.54%. Binance’s program allows users to earn rewards without staking or locking up their funds, <a href="https://www.binance.com/en/futures/bfusd" target="_blank" rel="noopener noreferrer nofollow">according</a> to Binance.&nbsp;
Stablecoins like BFUSD are cryptocurrencies designed to maintain a stable value, often pegged to traditional currencies like the U.S. dollar. They are commonly used for trading, lending, or earning interest in decentralized finance platforms.&nbsp;
According to the information on the <a href="https://crypto.news/tag/Binance" target="_blank" rel="noopener noreferrer nofollow">Binance</a> website, it seems that the stablecoin can be utilized as collateral with a collateral ratio of 100%, which makes it an appealing option. However, the origin of the yield and its sustainability remain unclear at this time.
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<h2 class="wp-block-heading" id="binance-s-dive-into-stablecoins">Binance’s dive into stablecoins&nbsp;</h2>
Binance has dabbled with a stablecoin before with their BUSD stablecoin. The coin <a href="https://crypto.news/paxos-to-stop-minting-new-busd-stablecoin/" target="_blank" rel="noopener noreferrer nofollow">faced significant challenges</a> in 2023.&nbsp;
Issued by Paxos and regulated by the New York Department of Financial Services, BUSD was designed to maintain a 1:1 peg to the U.S. dollar with reserves held in cash or U.S. Treasuries.&nbsp;
However, in February 2023, Paxos <a href="https://crypto.news/paxos-to-stop-minting-new-busd-stablecoin/" target="_blank" rel="noopener noreferrer nofollow">was ordered to stop issuing BUSD</a> due to regulatory scrutiny from U.S. authorities, including the SEC, which suggested BUSD might be classified as an unregistered security.
This regulatory intervention <a href="https://crypto.news/controversy-around-busd-drives-calls-for-decentralization/" target="_blank" rel="noopener noreferrer nofollow">led to a decline</a> in BUSD’s market capitalization, dropping from over $16 billion in early 2023 to under $3 billion by the end of the year.
The halt in new issuance also prompted Binance to shift its focus toward other stablecoins, like USDT (<a href="https://crypto.news/price/tether/" target="_blank" rel="noopener noreferrer nofollow">USDT</a>) and its newly launched BFUSD. Despite its struggles, BUSD continued to function within the Binance ecosystem as a tool for trading and collateral in DeFi, though its future remained uncertain.
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Binance launches BFUSD stablecoin offering 19.55% APY

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