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Aave community considers freezing BUSD reserves

Published date:

February 2, 2026

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The governance proposal stated, "It seems that the most reasonable path for Aave is to freeze this [BUSD] reserve and invite users to switch to another stablecoin among the diversity present in Aave."

The Aave (AAVE) community members are considering a proposal that seeks to freeze the Binance USD (BUSD) reserves on Aave V2 following the recent crackdown on the stablecoin by regulators.

Members of the Aave community are examining whether to freeze the Binance's BUSD stabelcoin on the platform after the token's issuer Paxos was sued by the SEC today.

Decentralization for the win
— whalechart.org (@WhaleChart) February 13, 2023

The proposal was submitted by Aave’s Integrations Lead Marc Zeller. It stated that recent developments can cause the remaining supply of BUSD to trend to zero after April.

The governance proposal added that since Paxos cannot mint new BUSD tokens, using the stablecoin could hurt the asset peg. Therefore, the proposal intends to freeze the remaining BUSD reserves and ask users to switch to another stablecoin on the Aave protocol.

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The proposal has gained some support among the Aave community as of writing.

On February 10, reports emerged that Paxos was under investigation by the New York regulator NYDFS. A few hours ago, the NYDFS ordered Paxos to stop issuing BUSD, causing the crypto community to worry about the future of the stablecoin.

Written by

Ayush Pande

Ayush Pande is a hardware, gaming, and crypto writer based in India. He's a tech enthusiast who's fascinated by the potential of blockchain technology.

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Ayush Pande

Written by:

Ayush Pande

Writer

As a tech enthusiast who's always on the prowl for the latest developments concerning crypto and hardware, you can find him covering news stories or tinkering with PCs.

About the Author

As a tech enthusiast who's always on the prowl for the latest developments concerning crypto and hardware, you can find him covering news stories or tinkering with PCs.

About the Author

Radica Maneva

Reviewed by:

Radica Maneva

Senior Editor

Radica is a Senior Editor at Bitcompare. She has worked for more than a decade at leading publications as an Editor across various industries, including crypto and finance.

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