Binance has confirmed plans to convert $1 billion worth of Binance USD (BUSD) from its Industry Recovery Initiative to native crypto assets, including Bitcoin, Ethereum, and BNB.
In a Monday tweet, Binance CEO Changpeng Zhao said the world’s largest cryptocurrency exchange plans to convert the remaining $1 billion of its Industry Recovery Initiative funds to BTC, BNB, and ETH amid the ongoing saga around banks and stablecoins. He said:
“Given the changes in stable coins and banks, Binance will convert the remaining of the $1 billion Industry Recovery Initiative funds from BUSD to native crypto, including BTC, BNB and ETH. Some fund movements will occur on-chain. Transparency.”
The crypto boss confirmed that the transaction has been successful in a subsequent tweet. Blockchain data shows the transaction took 5 seconds and cost merely $1.29. “Imagine moving $980 million through a bank before banking hours on a Monday,” CZ added.
The move has ostensibly contributed to buying pressure, pushing top cryptocurrencies higher. According to data by CoinGecko, BTC, ETH, and BNB have all gained around 8% over the past 24 hours.
Back in November, Binance announced that it is setting up an industry recovery fund to help rebuild the industry. At the time, Tron founder Justin Sun said that Tron, Huobi Global, and Poloniex supported the initiative.
The move also comes in the wake of Paxos, BUSD’s owner and issuer, being hit by a lawsuit from the United States Securities and Exchange Commission (SEC), with the agency claiming last month that the firm violated investor protection laws. Paxos announced it would halt BUSD minting and “end its relationship with Binance.”
Jitters Over Health of US Banks Harms USDC Stablecoin
The $1 billion conversion of BUSD to major cryptocurrencies comes amid a banking crisis that shook the United States banking sector over the weekend.
On Friday, Silicon Valley Bank, one of the most popular lenders to Silicon Valley tech and growth startups, failed after suffering from a bank. Subsequently, the Federal Deposit Insurance Corporation (FDIC) took control of the bank and created the Deposit Insurance National Bank of Santa Clara, which now holds the insured deposits from SVB.
While venture capital firms and tech startups were most severely affected by the collapse of Silicon Valley Bank, some major crypto companies have also revealed exposure to the bank. For one, USDC issuer Circle has $3.3 billion of its USDC reserves at the collapsed lender.
The news initially led to a wave of withdrawals and redemptions that led to USDC distancing away from its targeted peg of $1. However, the stablecoin has mostly corrected its losses over the past day, surging to around $0.99 at the time of writing.
Notably, Binance has also suspended the auto-conversion of USDC to BUSD due to current market conditions, “specifically related to high inflows & the increasing burden to support the conversion,” the platform said in a late Friday tweet.
CZ, meanwhile, once again put forward the idea of crypto-backed stablecoins while claiming that “banks are a risk to fiat-backed stable coins.” He said Do Kwon had the right idea but failed with its execution.