Binance Launches Yield-Bearing Stablecoin BFUSD Targeting Futures and Perpetuals Traders

BFUSD provides an annual percentage yield (APY) of approximately 19.55%, allowing users to earn daily rewards by holding BFUSD in their Binance futures accounts

Binance has launched a new yield-bearing stablecoin, BFUSD, specifically designed for futures and perpetuals traders on the Binance platform, as announced on Nov. 18.

Users can obtain BFUSD by swapping Tether USD (USDT) at a rate that ensures stability. As of Nov. 17, a reserve fund holds 1.1 million USDT, maintaining a collateralization ratio of 105.54%.

BFUSD provides an annual percentage yield (APY) of roughly 19.55%, enabling traders to earn daily rewards for holding the stablecoin in their Binance futures accounts. This feature eliminates the need for staking or locking funds.

However, users from regions where Binance Futures is not permitted, such as Brazil, will not have access to BFUSD. Additionally, countries where the Markets in Crypto-Assets (MiCA) regulation is in effect will not accrue user rewards for holding BFUSD.

Each user has a BFUSD holding limit, which is determined by their VIP level on Binance and can be further increased by completing know-your-customer (KYC) processes and achieving trading volume thresholds.

Interest is calculated based on the lowest BFUSD balance recorded from hourly snapshots taken throughout the day, with distributions made daily to users’ UM Futures accounts.

In Multi-Asset Mode, BFUSD can be used as collateral with a 100% collateral ratio, expanding traders' potential to trade across various assets.

This launch marks Binance's latest venture in the stablecoin domain following the New York Department of Financial Services (NYDFS) directive to Binance partner Paxos in February 2023 to halt the issuance of Binance USD (BUSD) amid regulatory scrutiny.

Since then, Binance has gradually reduced BUSD usage, including its removal from the SAFU Fund and the termination of borrowing and staking services.

By December 2023, Binance fully ceased supporting BUSD, directing users to the FDUSD stablecoin from First Digital.

As Binance plans its return to the stablecoin market, the landscape has become increasingly competitive. Stablecoins like sUSDe from Ethena offer an APY of 29%, while Tether's USDT maintains a market dominance of 74%.

Furthermore, tokenized money funds like BlackRock's BUIDL add another layer of competition, with the asset manager planning to treat the funds' shares as stablecoins for use as collateral.

It remains to be seen whether Binance's bold move will pay off during the current crypto market bull cycle and if it is worth the risk of another round of regulatory pressure.

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