Binance, the leading global cryptocurrency exchange, has made a significant change to its $1 billion emergency insurance fund. The fund, known as the “Secure Asset Fund for Users” (SAFU), was established in 2018 to protect Binance users during extreme circumstances. In an effort to enhance reliability, Binance has converted all of the fund’s crypto holdings into the stablecoin USDC.

The SAFU fund has historically aimed to maintain a balance of $1 billion, but the fluctuating prices of cryptocurrencies have affected the value of its holdings over time. At the end of 2022, the fund held $700 million worth of Binance USD (BUSD) and BNB, as well as $300 million worth of Bitcoin (BTC).

However, in early 2022, Paxos, the issuer of BUSD, received a “Wells Notice” from the U.S. Securities and Exchange Commission (SEC). The notice indicated that the SEC was considering taking action against BUSD, alleging that it was a security and that Paxos should have registered its offering under federal securities laws. Furthermore, the New York Department of Financial Services (NYDFS) ordered Paxos to halt the production of BUSD. As a result, Paxos decided to end its relationship with Binance for the branded stablecoin.

In response to these developments, Binance replaced the SAFU fund’s BUSD holdings with the stablecoins USDT and TrueUSD (TUSD) in March 2023. And now, all of these holdings have been converted to USDC, the second-largest stablecoin in terms of market capitalization. Binance believes that this switch will enhance reliability.

USDC was created in 2018 by Coinbase, the top U.S. cryptocurrency exchange, and Circle. The two companies jointly managed the asset through the Centre Consortium until last year. In August, Circle announced that it would bring all of USDC’s governance and operations responsibilities in-house.

In conclusion, Binance has made a strategic move by converting its SAFU fund’s crypto holdings into USDC, aiming to enhance the reliability of the emergency insurance fund. This decision comes after developments that affected the status of BUSD, the previous stablecoin held by the fund.