Binance Clarifies Upcoming "BFUSD" Token Is Not a Stablecoin, Addresses Concerns Over High Yield Promises

The confusion arose after a recent post on X, which reported that Binance was preparing to introduce a stablecoin with an annual yield of 19.55%.

Binance has clarified that "BFUSD" is not a stablecoin or an upcoming product launch, despite earlier reports suggesting the introduction of a stablecoin with a 19.55% annual yield.

The matter came to light after a recent post on X reported that Binance was preparing to introduce a stablecoin with an annual yield of 19.55%, prompting comparisons within the crypto community to the now-defunct algorithmic stablecoin TerraClassicUSD (USTC), which collapsed in 2022.

However, Binance quickly responded, highlighting that BFUSD is not a stablecoin but rather an upcoming margin trading product designed to offer rewards.

In a clarification posted on X, Binance explained that BFUSD would enable traders to use it as collateral in futures trading without having to lock up their funds or stake it. Instead, users will hold the asset in a “UM wallet” and receive daily airdrops to their “UM Futures Wallet,” with the amount varying based on their VIP status within the Binance platform.

Despite Binance's explanation, many crypto users were quick to draw parallels to the Terra ecosystem's downfall, especially the high-yield promises made by the Anchor Protocol for its algorithmic stablecoin UST.

The collapse of UST, which once boasted an 18 billion market cap before its dramatic crash in May 2022, still resonates within the community. As a result, the mention of a high yield attached to a Binance product triggered flashbacks to that episode, with some commentators questioning the sustainability of the yield and the source of such returns.