In a strategic financial maneuver, Binance, the world’s largest cryptocurrency exchange, has converted its entire $1 billion Secure Asset Fund for Users (SAFU) to Circle’s USD Coin (USDC), now holding 3% of its circulating supply. This move is part of Binance’s ongoing effort to enhance the safety and stability of its user assets, especially in critical situations such as exchange hacks.
Enhancing Asset Security with USDC
The decision to transfer 100% of SAFU’s assets to USDC was announced on April 18. Binance has not detailed the reasons for this switch beyond its goal of utilizing “a trusted, audited, and transparent stablecoin” to ensure the fund’s stability at its $1 billion valuation. This shift marks a significant move towards a more robust and reliable safeguarding mechanism for user assets on the platform.
Previously, the SAFU was diversified across several cryptocurrencies, including Bitcoin (BTC), Tether (USDT), True USD (TUSD), and Binance’s own BNB. The conversion process included notable transactions, such as transferring 800 million USDC on the Ethereum blockchain with a remarkably low transaction fee of $1.88. Additionally, there were transfers involving 1.36 million BNB, worth approximately $754 million, and a sizable 16,277 BTC, all part of the strategic shift to USDC.
Strategic Shifts in Response to Regulatory Changes
This transformation of the SAFU fund is not the first of its kind. In March 2023, Binance shifted its holdings from Binance USD (BUSD) to USDT and TUSD in response to regulatory pressures on the BUSD issuer Paxos, which had announced it would cease the minting of the stablecoin. This ongoing adaptation to the regulatory landscape highlights Binance’s proactive approach in managing its emergency fund.
The move to USDC, the second-largest stablecoin by market share at approximately 20%, comes at a time when USDC’s supply has seen a 33% increase since December 2023. Meanwhile, Tether continues to dominate the stablecoin market with a $108 billion circulating supply and a 69% market share.
