In response to market volatility, Binance has announced the conversion of 100% of assets in the user protection fund SAFU to the stablecoin USDC.
On April 18th, Binance exchange stated it would convert all BTC, BNB, USDT, and TUSD within SAFU to USDC. The exchange explained that storing assets under a transparent stablecoin like USDC would ensure the stability and reliability of the user protection fund.
According to transaction evidence provided by Binance, the exchange moved nearly $1 billion worth of Bitcoin and $722 million worth of BNB out of storage addresses, subsequently depositing only $800 million USDC back into the insurance fund address.
Therefore, it appears that Binance has gained over $900 million USD by holding BTC and BNB in the SAFU fund since February 2022. The exchange did not specify the purpose for this amount but stated it would continue to maintain the value of the SAFU fund at $1 billion USD.
SAFU (Secure Asset Fund for Users) is a user protection insurance fund established by Binance in 2018 to safeguard users in emergency situations such as technical failures impacting user assets. Since its establishment, Binance has allocated 10% of its trading fees to increase funds for SAFU in various cryptocurrencies like BTC, ETH, BNB, and several stablecoins.
Due to being held in different cryptocurrencies, the value of SAFU fluctuates with the volatility of these currencies. In February 2022, Binance announced that the fund had reached $1 billion USD and has maintained this threshold until now.
Binance’s move is understandable given the market’s sensitivity ahead of the upcoming halving event, scheduled for the evening of April 20th (Vietnam time). Numerous predictions about Bitcoin’s price during this period have been made, such as Arthur Hayes believing that the cryptocurrency will experience significant volatility around the halving, or JPMorgan predicting that BTC could even drop to $42,000 USD post-halving.