Binance picked Tether (USDT) and TrueUSD (TUSD) as a replacement for its Binance USD (BUSD) holdings in the Secure Asset Fund for Users (SAFU). US regulators banned the minting of new BUSD tokens last month. The ban caused a substantial drop in the BUSD market cap, forcing Binance to reinforce SAFU assets with alternatives.

Binance Says the Swap Won’t Impact Users

Binance has replaced its BUSD holdings in the SAFU fund with TUSD and USDT, the crypto exchange announced in a blog post on Friday. The move comes a month after US regulators ordered crypto firm Paxos to stop minting new BUSD tokens. Binance said the decision aims to ensure that “assets in SAFU continue to protect users in the long term as the BUSD market capitalization continues to decrease over time.”

The company said the swap would not impact users, adding that the funds would remain on publicly verifiable addresses. Also, BUSD will remain listed on Binance. At the same time, “the SAFU fund will be observed closely to ensure that it is sufficiently capitalized, and topped up periodically, as necessary, using Binance’s own funds.”

In February, the New York Department of Financial Services (DFS) instructed Paxos, a blockchain infrastructure firm issuing the BUSD, to stop minting new coins. The order came after the US Securities and Exchange Commission (SEC) said the BUSD is unregistered security.

Binance Forced to Swap Out BUSD After Notable Market Cap Decline

Associated with Binance, BUSD is the third-biggest stablecoin in the world by market cap. But after the regulators cracked down on Paxos, BUSD’s market valuation shrank significantly over the past month, forcing Binance to look elsewhere.

In addition to USDT, the biggest stablecoin by market cap, Binance has also opted for TUSD to swap out its BUSD holdings in the SAFU fund. Issued by TrustToken, TUSD is also a centralized stablecoin minted by a smart contract via a pool of off-chain USD reserves under the custody of trust companies.

Last month, Binance transferred $180 million to escrow accounts to mint an equivalent amount of TUSD coins, as shown by Lookonchain analytics data. TUSD’s reserves are audited by Armanino, one of the top accounting firms in Europe that also served the collapsed FTX.US in 2020 and 2021.

Following the FTX fiasco in November, Armanino halted all crypto audits. As a result of that decision, some members quit the company, forming a new crypto audit startup, The Network Firm, which now audits TUSD’s reserves.

This article originally appeared on The Tokenist

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