Binance has launched BFUSD, a new yield-bearing stablecoin designed for futures and perpetuals traders. It offers an annual percentage yield (APY) of approximately 19.55%, allowing users to earn daily rewards by holding BFUSD in their Binance futures accounts without the need to stake or lock funds.
Users can acquire BFUSD through Tether USD (USDT) swaps, with a collateralization ratio of 105.54% supported by a reserve fund holding 1.1 million USDT as of Nov. 17. Notably, BFUSD is not available to users in certain regions, such as Brazil, and does not accrue rewards in countries where the Markets in Crypto-Assets (MiCA) regulation is in effect.
Each user has a BFUSD holding limit based on their VIP level on Binance, which can be enhanced by performing know-your-customer (KYC) processes and reaching 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, allowing traders to expand their trading potential across various assets. This launch comes after Binance stopped supporting BUSD amid regulatory scrutiny in the United States, and now plans to return to the stablecoin market with BFUSD.
However, the stablecoin market is highly competitive, with other stablecoins such as sUSD offering a 29% APY and Tether’s USDT dominating 74% of the market. Additionally, tokenized money funds like BlackRock’s BUIDL present an extra layer of competition, as the asset manager plans to treat the funds’ shares as stablecoins used as collateral.
It remains to be seen if Binance’s bold move with BFUSD will pay off during the current crypto market bull cycle and if it is worth the risk of another round of regulatory pressure.