Binance USD (BUSD)

Overview

Binance USD (BUSD) is a digital token designed to represent one U.S. dollar. It belongs to a group of cryptocurrencies called stablecoins, which aim to give people a dollar-denominated way to move value on a blockchain. BUSD was developed through a partnership between cryptocurrency exchange Binance and financial technology company Paxos. Paxos issued the original token on Ethereum, while Binance brought it into its exchange and wider ecosystem. (paxos.com)

BUSD’s role has changed since its launch. Paxos stopped creating new tokens in February 2023, and Binance later ended most BUSD products and trading pairs. Existing Ethereum-based BUSD can still be sent between compatible wallets, and Paxos continues to support redemption for U.S. dollars through its platform. Understanding BUSD today means understanding both its original design and its ongoing wind-down. (paxos.com)

History & Team

A partnership built around digital dollars

Paxos and Binance announced BUSD in September 2019. Their plan combined Paxos’s ability to issue and hold reserves for a dollar-backed token with Binance’s exchange services. At launch, the partners described a way for customers to buy or redeem BUSD through Paxos and use it in cryptocurrency trading. New York’s Department of Financial Services had authorized Paxos to issue the Ethereum token. (paxos.com)

Binance was founded by Changpeng Zhao, known as CZ, and Yi He. Paxos was founded by Charles Cascarilla, Rich Teo, and Emil Woods. BUSD grew out of the work of these companies rather than a separate token-development team with its own founders. Its economic model also centered on customers exchanging dollars for tokens, rather than on a sale of tokens to project investors. (binance.com)

The project changed course in 2023. The New York Department of Financial Services ordered Paxos to stop minting BUSD because of unresolved issues involving Paxos’s oversight of its relationship with Binance. Paxos then began winding down the product. Binance gradually removed BUSD from services including trading pairs, lending, savings products, and payments. In January 2024, Binance announced that it had converted eligible BUSD balances on its platform to First Digital USD (FDUSD). (dfs.ny.gov)

Technology & How It Works

Ethereum tokens and dollar reserves

The original BUSD is an ERC-20 token on Ethereum. ERC-20 is a shared set of rules that lets wallets and applications recognize and transfer compatible tokens. BUSD’s smart contract records token balances and transfers on Ethereum. Its contract address is 0x4Fabb145d64652a948d72533023f6E7A623C7C53. The blockchain shows where tokens move; Paxos manages the dollar reserves and the process for redeeming tokens. (github.com)

When issuance was active, Paxos created BUSD against dollars held in reserve. Redemption works in the other direction: a customer sends eligible BUSD to Paxos, receives a corresponding dollar credit, and the redeemed tokens are removed from circulation. Paxos no longer mints new BUSD, so this process now serves holders of existing tokens. Paxos supports direct redemption of the Ethereum ERC-20 version through an approved Paxos account. (github.com)

BUSD also appeared on other networks through Binance-Peg BUSD. Binance created these wrapped versions for networks including BNB Chain, Avalanche, and Polygon. A wrapped token is designed to represent an asset held on another chain. Binance managed those versions, while Paxos issued the original Ethereum token. This distinction matters because the token’s network determines which company’s system handles it: Paxos’s direct redemption process accepts ERC-20 BUSD. (paxos.com)

The BUSD smart contract gives Paxos control over certain functions. During active issuance, Paxos could mint and burn tokens. The contract also includes the ability to pause transfers and freeze addresses under defined legal processes. Those features reflect BUSD’s design as a centrally issued digital dollar that can move across a public blockchain. (github.com)

Tokenomics & Utility

Supply follows issuance and redemption

BUSD was designed around a one-to-one relationship with the U.S. dollar: one token represents a claim that an eligible Paxos customer can redeem for one dollar. Its supply was therefore linked to dollars entering and leaving the issuance system, rather than to mining rewards or a fixed token limit. Paxos’s terms provide for one-for-one redemption, subject to its account and compliance processes. (dfs.ny.gov)

The reserves behind BUSD have included cash and U.S. Treasury instruments. Paxos published reserve reports and independent attestation reports during the product’s active years. Since it began winding down BUSD, Paxos says it no longer proactively publishes monthly reserve reports for the token. The token itself does not automatically pay holders interest: its main function is to transfer or redeem a dollar-denominated balance. (paxos.com)

With new minting stopped, redemption reduces the number of original BUSD tokens outstanding. The token’s remaining utility lies chiefly in transfers between Ethereum addresses, swaps where applications support it, and redemption through Paxos. It does not have a built-in role in voting on a protocol or paying the transaction fees of its own blockchain; Ethereum transactions generally require ETH for network fees. (paxos.com)

Ecosystem & Use Cases

BUSD was introduced as a common dollar unit for cryptocurrency trading. A trader could move between a crypto asset and BUSD without first withdrawing money to a bank. Its ERC-20 format also allowed Ethereum applications to handle it using the same tools they use for other compatible tokens. Historically, BUSD appeared in decentralized exchange pools and in Binance services such as payments and lending. Binance later ended or reduced those product integrations during the wind-down. (paxos.com)

As a transferable token, BUSD can also be used to send a dollar-denominated amount to another Ethereum wallet. Public blockchain records make the movement of tokens visible, while settlement takes place on Ethereum rather than through a bank transfer. A receiving wallet can hold the tokens, use a supported on-chain application, or move eligible ERC-20 BUSD into Paxos’s redemption process. Each of those uses depends on the service accepting the token and its network. (ethereum.org)

Advantages & Challenges

BUSD joined a familiar unit of account—the U.S. dollar—with Ethereum’s token standard. This made it easier for wallets and applications to support than a token needing entirely new infrastructure. Paxos’s one-for-one redemption framework gave eligible holders a direct route from the original Ethereum token back to dollars. Published reports also gave readers a way to examine the reserve arrangement during BUSD’s active years. (ethereum.org)

Its design also has clear limits. Issuance and redemption depend on Paxos, and the smart contract gives the issuer administrative powers. Wrapped versions on other chains depend on Binance’s separate process. The end of new issuance and Binance’s withdrawal of BUSD products have narrowed the token’s former role across exchanges and applications. Ethereum transfers still require network fees, while direct dollar redemption requires a Paxos account. These features shape how the remaining token can be used. (github.com)

Where to Buy & Wallets

BUSD is available for swaps on Ethereum-based decentralized exchanges such as Uniswap and Curve, through pools that support the original ERC-20 token. Paxos no longer sells or mints BUSD. Binance ended BUSD withdrawals and converted eligible balances on its platform to FDUSD; its January 2024 announcement described a continuing deposit-and-conversion process. These are different routes from buying newly issued BUSD directly from Paxos, which has ended. (app.uniswap.org)

MetaMask can display ERC-20 BUSD in an Ethereum wallet, including by adding the token’s contract address when needed. Ledger devices can manage ERC-20 tokens through an Ethereum account and compatible wallet software. Ethereum is the network to select for Paxos-issued BUSD, and sending it requires ETH to cover the network fee. Paxos’s direct redemption service accepts that ERC-20 version after a customer completes account setup. (support.metamask.io)

Regulatory & Compliance

New York’s Department of Financial Services authorized Paxos’s original Ethereum issuance and supervised the company as a limited-purpose trust company. The department requires stablecoins issued by its regulated entities to be backed one-to-one by cash or cash equivalents, and Paxos is required to redeem eligible original BUSD at one dollar per token under its compliance procedures. The department’s authorization applied to Paxos-issued BUSD on Ethereum; Binance-Peg versions on other networks fell outside that authorization. (dfs.ny.gov)

The same regulator ordered the end of BUSD minting in 2023 over issues involving Paxos’s oversight of Binance. In August 2025, it entered into a consent order with Paxos addressing that relationship and broader compliance shortcomings. Direct redemption through Paxos involves customer onboarding and checks, including identity and transaction review. The token’s legal and practical treatment can therefore differ between an on-chain transfer, a third-party exchange, and redemption with its issuer. (dfs.ny.gov)

Shariah compliance calls for a separate assessment of the financial arrangement. BUSD itself pays no automatic return to its holder, but its reserves have included U.S. Treasury instruments. That reserve structure, along with whether the token is used for a payment or in an interest-bearing arrangement, is relevant to an assessment under Islamic finance principles concerning riba, or interest. The Islamic Financial Services Board describes some categories of crypto-assets as subjects of Shariah debate, so BUSD’s dollar backing alone does not settle its halal status for every use. (paxos.com)

Future Outlook

BUSD’s established path is a wind-down rather than renewed issuance. Paxos continues to support redemption of the original ERC-20 token for dollars and says customers can convert BUSD to its Pax Dollar token, USDP. Meanwhile, Ethereum’s ERC-20 standard allows existing BUSD to remain recognizable to compatible wallets and applications. (paxos.com)

Its future role depends mainly on how holders use or redeem the tokens that remain. As redemption removes tokens from circulation and former Binance integrations have ended, BUSD’s importance as a widely used exchange unit has given way to its role as an example of how a regulated issuer can create—and later wind down—a blockchain-based dollar token. (github.com)

Summary

Binance USD brought together Paxos-issued dollar backing, Ethereum token technology, and Binance’s exchange ecosystem. New issuance has ended, but original ERC-20 BUSD remains transferable and redeemable through Paxos for eligible customers. Its history shows how a stablecoin’s technology, issuer, reserves, and distribution partners each shape what the token can do. (paxos.com)