Community members and users are kicking against Binance’s decision to convert its strategic fund from stablecoins to Bitcoin. Binance in a statement released on Friday said it is set to redenominate the Secure Asset Fund for Users (SAFU).Â
In the communique, Binance stated that it has a strong conviction that Bitcoin is the core long-term asset of the cryptocurrency industry. Moreover, the exchange said the conviction influenced its decision to convert SAFU reserves from stablecoin to BTC.
However, community members pointed to the volatility of Bitcoin, which may affect the value of the fund. They discuss how the conversion of the SAFU reserve to BTC will expose it to serious price swings and may not be able to perform its purpose in the case of a large exploit.
Also, critics emphasized that unlike stablecoins that guarantee price stability, BTC may struggle to meet high demands during an insolvency issue that requires a rapid payout.
Meanwhile, this isn’t the first time Binance has redenominated its SAFU reserve. In 2024, the exchange announced the conversion of the fund from BUSD into USDC, as US regulatory pressure forced the exchange to stop the circulation of its branded stablecoin.
Binance promises strategic top-up
While addressing community concerns, Binance assured that the fund will continue to serve its purpose despite the latest repositioning. Similarly, the cryptocurrency exchange hinted at its plan to top up the strategic fund if it plunges below $800 million.
Additionally, the crypto trading platform vowed that it would continue to support the industry by investing in assets that are propelling the broader cryptocurrency market. Binance stated that at intervals it will review the position of the SAFU to further protect users.
It is worth mentioning that Binance launched the Secure Asset Fund for Users in 2018 as an emergency pool to reimburse users in cases such as hacks or critical system failures. Furthermore, with the funds, the cryptocurrency exchange intends to help cover users’ losses during unusual circumstances.
As revealed, the SAFU comprises a portion of the exchange’s trading fees and has intervened in some cases in the past. For instance, in May 20219, hackers stole 7,000 BTC from users and the exchange covered the deficit with funds from the SAFU reserve.
For many years, the SAFU reserve has been a key part of Binance’s trust and risk management strategy. On various occasions, the exchange has assured users that their assets are fully backed on a 1:1 ratio, promoting itself as a reliable trading platform.
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