What Is BUSD? 3 Reasons to Use BUSD on Binance

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Stablecoins are a cornerstone of the cryptocurrency ecosystem, offering users a reliable bridge between traditional finance and digital assets. Among the most widely used stablecoins, BUSD stands out—particularly for traders on Binance. This article explains what BUSD is, how it compares to other stablecoins like USDT, and why it may be the smarter choice for your crypto trading activities in 2025.

We’ll start with the basics for newcomers, then dive into three compelling reasons why using BUSD on Binance makes strategic sense—from transparency and security to cost-saving trading benefits.

What Is a Stablecoin?

A stablecoin is a type of cryptocurrency designed to maintain a stable value by being pegged to a reserve asset, typically a fiat currency like the U.S. dollar. Unlike volatile cryptocurrencies such as Bitcoin or Ethereum, stablecoins aim to minimize price fluctuations, making them ideal for storing value, transferring funds, and executing trades without exposure to market swings.

The most well-known example is Tether (USDT), which is pegged 1:1 to the U.S. dollar. In theory, one USDT should always equal $1. However, the actual stability of a stablecoin depends heavily on the transparency and integrity of its underlying reserves.

Enter BUSD, a regulated stablecoin developed through a partnership between Binance and Paxos Trust Company. Like USDT, BUSD is also pegged 1:1 to the U.S. dollar—but with critical differences in oversight, auditing, and user benefits.

Why Stability and Security Matter in Stablecoins

For a stablecoin to maintain its $1 value, it must be backed by real-world assets—ideally, actual cash or highly liquid equivalents. The principle is simple: for every BUSD or USDT in circulation, there should be $1 held in reserve.

However, trust becomes an issue when transparency is lacking. In recent years, Tether (USDT) faced scrutiny after reports revealed that only about 74% of its reserves were in cash or cash equivalents, with the remainder tied up in commercial paper and other less liquid assets. This raised concerns about whether USDT could truly withstand a large-scale redemption event.

This is where BUSD differentiates itself through stronger safeguards.

Reason 1: 100% Cash and Cash-Equivalent Reserves

One of the most important features of BUSD is that it is fully backed by cash and cash-equivalent reserves. This means that for every BUSD token in circulation, there is an equivalent amount of U.S. dollars or highly liquid assets held in reserve.

Cash equivalents include short-term, low-risk instruments like U.S. Treasury bills and money market funds—assets that can be quickly converted into cash without significant loss of value.

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This full backing ensures that even during periods of high market volatility or mass redemptions, BUSD holders can trust that their tokens remain redeemable at face value. Compared to other stablecoins with opaque or partially backed reserves, BUSD offers greater confidence and financial integrity.

Reason 2: Regulatory Compliance and Transparent Audits

Security isn’t just about reserves—it’s also about accountability.

BUSD is issued by Paxos Trust Company, a New York State-chartered limited-purpose trust company regulated by the New York Department of Financial Services (NYDFS). This regulatory oversight means Paxos must adhere to strict financial standards, including anti-money laundering (AML) and know-your-customer (KYC) protocols.

Moreover, Paxos undergoes monthly third-party audits conducted by independent accounting firms such as Withum. These audits verify that the amount of BUSD in circulation matches the reserves held in custody.

The audit reports are publicly available on Paxos’ official website, ensuring full transparency. Users can review these documents at any time to confirm that BUSD remains fully backed.

This level of openness is rare in the crypto space and gives traders peace of mind—especially in an industry where trust is often tested.

Reason 3: Zero Trading Fees on Binance

Here’s where BUSD becomes not just secure—but also cost-effective.

Binance, one of the world’s largest cryptocurrency exchanges, currently offers zero trading fees for spot and leveraged spot trades conducted using BUSD. This promotion applies to limit orders, meaning you pay no fees when placing buy or sell orders at a specified price.

For active traders, this can result in significant savings. Normally, Binance charges a standard 0.1% fee per trade. Over hundreds of transactions, even this small percentage adds up. By using BUSD, traders eliminate this cost entirely during the promotional period.

This makes BUSD not only a safe haven asset but also a practical tool for optimizing trading performance on Binance.

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Frequently Asked Questions (FAQ)

Q: Is BUSD safer than USDT?

Yes, many experts consider BUSD safer due to its full regulatory oversight by NYDFS and regular third-party audits. Unlike USDT, which has faced controversy over reserve composition, BUSD maintains full transparency and 100% cash-backed reserves.

Q: Can I redeem BUSD for real dollars?

Yes. BUSD holders can redeem their tokens directly through Paxos for U.S. dollars, subject to verification and compliance checks. This redemption feature reinforces its status as a truly backed stablecoin.

Q: Where can I use BUSD?

BUSD is widely supported across major exchanges including Binance, Crypto.com, and others. It’s commonly used for trading pairs, earning interest in DeFi protocols, and as a stable store of value during market downturns.

Q: Has BUSD ever lost its $1 peg?

BUSD has maintained its $1 peg with minimal deviation, thanks to its robust reserve system and redemption mechanism. While minor fluctuations may occur due to market supply and demand, arbitrage mechanisms quickly restore balance.

Q: Will BUSD continue to have zero trading fees on Binance?

The zero-fee promotion is currently active but subject to change. Binance typically announces updates well in advance, so users should monitor official channels for any changes to fee structures.

Q: What happens if Paxos shuts down?

Even in the unlikely event of Paxos ceasing operations, the reserves backing BUSD are held separately from company assets. Regulators would oversee the orderly wind-down process, ensuring users can redeem their holdings.

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Final Thoughts

Choosing the right stablecoin matters—not just for stability, but for security, transparency, and cost efficiency. While USDT remains popular due to its liquidity, BUSD offers superior regulatory compliance, full reserve backing, and tangible trading advantages on Binance.

For new and experienced traders alike, adopting BUSD as your go-to stablecoin can provide both confidence and financial benefit in today’s dynamic crypto landscape.

Whether you're hedging against volatility, executing high-frequency trades, or simply holding value between investments, BUSD combines trustworthiness with practical utility.

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Remember: In cryptocurrency, stability isn’t just about price—it’s about trust, transparency, and long-term reliability. And when those factors matter most, BUSD stands ready as a leading choice for modern digital finance.