- Binance has converted its SAFU emergency insurance fund into USDC stablecoin
- Binance said it converted the $1 billion fund into USDC to enhance reliability and ensure the price doesn’t fluctuate.
Giant cryptocurrency exchange Binance has made another strategic move by converting its SAFU (Secure Asset Fund for Users) to USDC stablecoin. The firm established SAFU in 2018 as an emergency insurance fund for users – an integration that distinguishes Binance from many other exchanges. The reserve, set at $1 billion, remains at the core of the company’s financial responsibility towards customers.
Market Stability and Regulatory Compliance Drive Binance’s Decision to Convert SAFU Reserves to USDC
Announcing the development in its blog, Binance described SAFU as a “core part of our responsibility to the ecosystem” and its strategic conversion to USDC as part of its evolution to “meet market conditions head-on” and ensure the stability of the $1 billion emergency fund.
“Today, we are transferring 100% of SAFU’s assets to USDC. Making use of a trusted, audited, and transparent stablecoin for SAFU further enhances its reliability and ensures it remains stable at $1B,” said Binance.
USDC, a stablecoin created by Circle, has been subject to regular audits since its creation, a quality Binance said influenced its transfer decision. According to Circle, its USDC reserve “has been audited annually since launch in 2018 by a leading global accounting firm.” Such audits check the accuracy of the firm’s financial statements, and the content of the reserve, among other things.
For USDC to “be the most transparent and trusted dollar digital currency,” Circle also submits monthly attestations for an extra layer of transparency and assurance. These monthly audits, performed by a reputable accounting firm, give details of the size and content of the USDC reserve and provide reliable “third-party assurance” to the ecosystem that the USDC reserve aligns with the circulating supply.
Before now, the SAFU fund wallets comprised BNB, BTC, USDT, and TUSD. However, these former fund assets, especially BNB and BTC are always prone to wild fluctuations, which impact the price of the reserve. The drift into a USDC-backed fund is expected to provide greater stability and regulatory compliance for Binance’s SAFU.
There have been several controversies against the USDT stablecoin. In February’s Congressional Hearing, Caroline Hill, Circle’s Senior Director for Global Policy and Regulatory Strategy, called on Congress to allow the Treasury to go after Tether over lack of regulatory compliance and their complicity in “terrorist financing and other malign activities.”
USDC, on the other hand, has a more favorable standing with US regulation, being regulated by the New York State Department of Financial Institutions and audited annually by BlackRock and BNY Mellon. These transparency strides give it an edge over USDT on the regulatory front and ensure its reliability within Binance’s ecosystem as a long-term insurance currency.
Following SAFU’s transfer to USDC, the $1 billion fund now holds 3 percent of the 32.6 billion USDC in circulation. Additionally, instead of three different addresses for BTC, BNB & USDT, and TUSDT, the SAFU now has a single USDC address published on Binance’s website.