Binance USD (BUSD) Reviewed

  This Binance USD review has revealed that Binance USD, also known as BUSD, is a digital-fiat currency that was issued as an ERC20 token and which supports BEP-2.      

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9		Read Review	ASIC, CySEC, IFSC, DFSA, FCA	$5
10		Read Review	FSA, CySEC, FSCA, FSC	$10

What is Binance USD?

  Binance USD (BUSD) was launched in 2019 to meld the stability of the US Dollar through blockchain technology. BUSD is a USD-backed stablecoin that is issued by the Binance exchange trading platform. BUSD is approved as well as regulated by the New York State Department of Financial Services (NYDFS).  

Key Features and Takeaways of Binance USD

  BUSD has the following key features, as well as takeaways:

• BUSD is a digital-fiat currency that was issued as an ERC20 token and supports BEP-2.
• BUSD plays a vital role in transactions, payments, settlement, and Decentralised Finance (DeFi).
• BUSD is pegged against the US Dollar and is regulated and approved by NYDFS in partnership with Paxos.
• Even though BUSD is based on the Ethereum blockchain, it is set to run on a highly scalable blockchain known as the Fincubate (FCB) Financial Blockchain, which makes use of Graphene technology for high throughput, and which can support high-frequency financial applications.
• Behind each BUSD, there is a US Dollar in capital reserve. Thus, 100% of BUSD, which is in circulation, has a corresponding USD asset in the custody of third-party financial trusts.
• BUSD is part of Binance’s Venus project, which is designed to accelerate development as well as integration of stablecoins in the global economy.
• Binance, in cooperation with other multinational financial corporations, enables its users to invest in credit cards and other cryptocurrencies through its platform as BUSD can only be purchased by credit card.

Binance USD Mining

• BUSD, even though it is based on the Ethereum blockchain, cannot be mined. Binance USD was created to be fully collateralized with the USD, which is held in US bank accounts at a ratio of 1:1.
• These accounts were created and administered by Paxos, and they are also audited monthly according to New York state regulations. Requests to either buy or sell BUSD are therefore accompanied by a movement of cash in or out of the reserve account.
• According to these requests, BUSD tokens can either be minted or burned accordingly. As the BUSD is pegged to the value of USD, requesting to purchase $1 000 worth of BUSD, or 14 242 ZAR at the time of writing, will result in the minting of 1 000 BUSD tokens.
• This will subsequently increase $1 000 in the abovementioned reserve accounts. On the opposite end of this redemption of 1 000 BUSD, it will cause the burning of these tokens and a subsequent decrease of $1 000 in the reserve. This is a result of the US dollars that are removed and transferred to the user who redeemed the tokens.
• If there is a significant security threat, for instance, a hack attempt, Paxos can pause the transfer, creation, or destruction of BUSD tokens. BUSD is an ERC20 asset that is simple to trade, as transferring and viewing of transactions has the support of most wallets and exchanges that allow Ethereum.
• BUSD is monitored and regulated by the NYDFS in compliance with the Trust Charter. Through this, Paxos is obligated to follow all applicable New York banking laws, and it ensures that Paxos can freeze accounts and wipe account balances when required.
• This specific regulation is adhered to through a “setLawEnforcementRole” function, which can be used to place administrative restrictions on the circulating supply of BUSD.

Pros and Cons

Should you buy Binance USD?

• BUSD has become an increasingly popular avenue for investment since its launch. Apart from the strict regulation and guarantee of security, there are numerous advantages of BUSD, but it should be noted that this is not a cryptocurrency that can be traded, bought, or sold with the intention of making a profit.
• BUSD was created simply to improve the decentralized financial ecosystem by using a global network that is frictionless and allows for digital assets to improve accessibility, flexibility, and speed to various transactions. Plainly put, BUSD offers users the ability to transact with other digital and blockchain-based assets while simultaneously minimizing volatility risks.
• BUSD can be traded with 48 other currency pairs at a 1:1 ratio with the US dollar. In addition, BUSD also has low transaction fees, which make it an excellent alternative for any currency. BUSD is also not limited to real-world assets, and it can be exchanged for other popular stablecoins at a 1:1 basis with fewer fees.
• BUSD also allows users to earn money either actively or passively, with many holding BUSD in their wallets and hedging their bets against the volatility of accumulated digital assets. Alternatively, others actively trade their BUSD on either Paxos or Binance.

How to buy Binance USD (BUSD)

Step 1 – Register an account with Gate.io

• Navigate to the official Gate.io website and select the option to “Sign Up” from the homepage.
• Complete the online registration form by providing country/region, a selected username, email address, and a user-selected password. Read and accept the User Agreement and Privacy and select “Next”.
• Create a fund password and select “Create Account”. Complete the “I am not a robot” reCAPTCHA.
• Check your email inbox for the activation email and click on the link in the email. If the link does not work, you can copy and paste the URL into your browser.
• Log in to your account using your credentials and complete the reCAPTCHA.
• Check your email again for the verification email that contains the 6-digit code and click on “Confirm”.
• Enter the code that you received into the blocks provided and select “Log In” to proceed.
• Before you can use the platform to purchase Binance USD/BUSD and other cryptocurrencies on Gate.io, you must complete the “Know Your Client” or KYC procedure to verify your identity and your proof of residence.
• Click on “KYC Now” at the bottom of the webpage to start the process.
• Select whether you are an individual or an organization by selecting “Verify Now” under the relevant option.
• Select your country from the dropdown list, enter your full name followed by confirmation thereof. Select your ID document type and provide your ID Number as shown on your official ID Document.
• Click on the first image to upload a clear photo of the front of your ID document, followed by a clear photo of the back of the document.
• Next, write your Gate.io unique ID on a piece of paper and take a photo of yourself holding up your identity document (front) and the paper containing your unique ID.
• Once you have done this, click on “Confirm and Submit”.
• Next, you must enable the Timed One-Time Password (TOTP) to be able to log into your account. This can be done by clicking on “Set Now” at the bottom of the page.
• On the new page that loads, select “Click here” to set up Two-factor Authentication.
• Download Google Authenticator onto your mobile device by making use of any of the above-mentioned methods.
• Follow the steps indicated to add your Gate.io account by scanning the QR code or entering your unique key.
• Enter the TOTP, your fund password, and the code sent to your email address, and select “Enable Two-factor Authentication”. With this setup, you must use the Google Authenticator app to sign into your account every time.

Step 2 – Deposit funds

• You must note that Gate.io is only a crypto-to-crypto exchange, which means there is no fiat gateway.
• The only way to add funds is to transfer existing crypto into your Gate.io wallet.
• BUSD can only be bought through Tether/USDT or Ethereum/ETH.
• Navigate to the deposit/withdrawal section by hovering over your account and selecting the relevant option.
• Choose from the list of coins in which you can make a deposit and select “deposit” next to the appropriate coin.
• You will be redirected to a page that generates a deposit address for the coin that you wish to deposit.
• Copy this address, or scan the QR code, into the wallet where you are making a withdrawal from and depositing to Gate.io, and wait for the relevant blockchain to confirm your transaction.
• Once the transaction has been completed and verified by the nodes on the chain, the coins will be sent to the Gate.io wallet, and you can start trading BUSD.

Step 3 – Explore your trading options

• Gate.io offers a variety of ways through which cryptocurrencies can be obtained.
• Each of these can be explored individually depending on your trading needs and objectives.
• To start trading BUSD, select the option from the “Trade” Menu. Enter “BUSD” into the search bar to see which trading options are available.
• For spot trading, for instance, and as an example, select BUSD_USDT.
• Once you have selected, you will be directed to the exchange page, which corresponds to the cryptocurrency pair BUSD/USDT.
• Here, you will see that you have the option to buy or sell BUSD either as a limit order, grid trading, or as a time condition.
• The most common trading method is that of limit trading, and thus it will be used for this guide.

Step 4 – Buy BUSD via Limit Order

• To buy BUSD and create a limit order for it, you can enter the amount of BUSD you want to purchase and the price you want to buy it at in USDT.
• This tool will tell you what the overall cost is in USDT, or any other chosen counter-currency, which will be deducted from your wallet once the order has been executed.

Step 5 – Sell BUSD via Limit Order

• To sell BUSD, find the panel under the chart and create a limit order for USDT according to your own preferences.
• Note that with a peg to USD, BUSD that you exchange for USDT will hold the flat value that it has, despite market conditions in the cryptocurrency market.

Step 6 – Withdraw funds

• To withdraw funds, you will use the same page in Gate.io that was used to make a deposit.
• Click on the deposit/withdrawal option on your Account dropdown and find the wallet of the currency that you wish to withdraw. You can do this easily by using the search bar provided.
• Instead of a deposit address being generated, you will do this on the exchange or the wallet being used as the destination for withdrawal of funds from Gate.io.
• Paste the address of the receiving wallet in the field provided and provide your Gate.io fund password, email code, and TOTP before selecting “Submit Request”.

Binance USD vs Other Stablecoins

• Binance USD (BUSD) operates in a competitive stablecoin market alongside other major players such as USDT (Tether), USDC, and DAI.
• Understanding how BUSD compares is essential for investors and users.

BUSD vs USDT (Tether)

USDT is the most widely used stablecoin, but BUSD offers:

• Stronger regulatory oversight (NYDFS approval)
• Higher transparency through audited reserves
• Integration with the Binance ecosystem

  However, USDT dominates in:

• Liquidity
• Global adoption
• Exchange availability
• BUSD vs USDC

  USDC is another regulated stablecoin similar to BUSD.   BUSD advantages:

• Deep Binance integration
• Lower trading fees on Binance

  USDC advantages:

• Wider institutional adoption
• Strong presence in DeFi

BUSD vs DAI

• DAI is decentralized, unlike BUSD.

  BUSD advantages:

• Stable 1:1 backing with USD
• Simpler structure

  DAI advantages:

• Fully decentralized
• Not controlled by a central authority

Quick Comparison Table

Real-World Use Cases of Binance USD

BUSD is not just a stablecoin—it plays a critical role in the broader crypto ecosystem.  

Trading and Liquidity

• Reduces volatility exposure
• Allows quick entry/exit from trades
• Improves liquidity on exchanges

Payments and Transfers

• Fast transactions
• Low fees
• Borderless payments

  This makes it useful for remittances and online payments.    

DeFi Applications

BUSD is used in decentralized finance for:

• Lending and borrowing
• Yield farming
• Liquidity pools

Hedging Against Volatility

Investors use BUSD to:

• Protect funds during market downturns
• Lock in profits
• Reduce exposure to crypto price swings

Business Transactions

• International payments
• Smart contract settlements
• Financial operations

Advantages of Using BUSD in South Africa

• BUSD is particularly useful in emerging markets like South Africa.

Protection Against Random Volatility

  The South African Rand (ZAR) can be volatile. BUSD provides:

• USD stability
• Value preservation
• Easy access to global currency

Low Transaction Costs

• Lower fees
• Faster processing
• No intermediaries

Accessibility

• Store BUSD
• Send payments
• Access DeFi

Global Access

• Trade internationally
• Access global markets
• Avoid currency restrictions

Risks and Limitations of Binance USD

While BUSD offers many benefits, it is not without risks.  

Centralization Risk

BUSD is controlled by Binance and Paxos, meaning:

• Accounts can be frozen
• Transactions can be restricted

Regulatory Risk

Government regulations can impact:

• Availability
• Usage
• Issuance

Dependency on USD

BUSD’s value depends entirely on the US Dollar.  

Platform Risk

Issues with Binance or Paxos could affect BUSD users.  

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Frequently Asked Questions

When was Binance USD first launched?

Binance USD (BUSD) was launched in September 2019 as a regulated stablecoin designed to combine the stability of the US Dollar with blockchain technology. It was introduced to provide users with a secure, transparent, and efficient digital currency.  

Who founded Binance USD?

Binance USD was created through a partnership between Binance, one of the world’s largest cryptocurrency exchanges, and Paxos, a regulated financial institution. This collaboration ensures that BUSD is fully backed, compliant, and operates under strict financial regulations.  

What is “ICO”?

An Initial Coin Offering (ICO) is a fundraising method used by blockchain projects where investors purchase tokens in exchange for capital. Unlike traditional IPOs, ICO participants typically do not receive ownership rights or equity in the issuing company.  

When was Binance USD’s ICO, and how much did it raise?

Binance USD did not have an Initial Coin Offering (ICO) because it is a stablecoin. Instead, BUSD is issued based on demand and backed 1:1 by US Dollar reserves, ensuring its value remains stable and fully collateralized.  

Is Binance USD legit?

Yes, Binance USD is considered a legitimate stablecoin. It is fully backed by US Dollar reserves and regulated by the New York State Department of Financial Services, ensuring transparency, compliance, and a high level of trust among users.  

What is Binance USD’s total supply?

The total supply of Binance USD varies over time based on demand, but it has reached over 1.1 billion tokens. Supply increases when new BUSD is issued and decreases when tokens are redeemed and burned.  

What is the purpose of Binance USD?

The purpose of Binance USD is to provide a stable digital currency that combines the benefits of blockchain technology with the reliability of fiat currency, enabling fast, secure transactions, trading, and participation in decentralized finance applications globally.  

On which blockchain is Binance USD based?

Binance USD is primarily issued as an ERC20 token on the Ethereum blockchain, but it also supports other networks such as Binance Chain (BEP-2) and Binance Smart Chain (BEP-20), offering flexibility and faster transaction options.  

Does Binance USD work with smart contracts?

Yes, Binance USD supports smart contracts as an ERC20 token on Ethereum. This allows it to integrate with decentralized applications, enabling automated transactions, lending, and other DeFi use cases without relying on intermediaries.  

Does Binance USD have the potential to become more valuable?

Binance USD is designed to maintain a stable value equal to the US Dollar, meaning it does not increase in price like other cryptocurrencies. Its value depends on the dollar, making it useful for stability rather than investment growth.  

Does Binance USD work with smart contracts?

Yes, there are existing ERC20 smart contracts that work alongside BUSD tokens. They help to offer security for the process and remove the need for third parties, moving transactions to the trusted capabilities of the blockchain.  

Does Binance USD have the potential to become more valuable?

BUSD is pegged to the US dollar, and the value of BUSD is in a 1:1 ratio with the dollar. As the dollar increases, so will BUSD.  

Can Binance USD lose its value?

Binance USD is designed to maintain a 1:1 peg with the US Dollar, meaning its value should remain stable. However, extreme market conditions, regulatory issues, or problems with reserves could temporarily affect its stability, although this is considered unlikely.  

Is BUSD better than holding cash?

BUSD can be better than holding cash for crypto users because it allows fast transactions, global access, and integration with DeFi platforms. However, it carries platform and regulatory risks that traditional bank-held cash may not have.  

Can you earn interest with BUSD?

Yes, users can earn interest on BUSD through staking, lending, or yield farming platforms. Many exchanges and DeFi protocols offer passive income opportunities, allowing users to generate returns while maintaining exposure to a stable asset.  

Is BUSD safe for beginners?

BUSD is generally considered beginner-friendly because of its stable value and simple use case. However, beginners should still understand wallet security, exchange risks, and how stablecoins work before investing or storing significant amounts of funds.  

What makes BUSD different from cryptocurrencies like Bitcoin?

Unlike Bitcoin, which is volatile and used as a store of value, BUSD is a stablecoin pegged to the US Dollar. It is designed for stability, transactions, and liquidity rather than price growth or long-term speculative investment.  

Can Binance USD be used internationally?

Yes, Binance USD can be used globally for fast and low-cost transactions. It enables users to send and receive funds across borders without traditional banking delays, making it ideal for remittances, online payments, and international crypto trading activities.  

What are the main uses of Binance USD?

Binance USD is primarily used for trading, payments, and decentralized finance applications. It helps users reduce volatility, store value, and access liquidity while interacting with crypto markets, making it a versatile stablecoin within both centralized and decentralized ecosystems.  

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