Binance will stop supporting USD Coin trades in favor of its own stablecoin
Binance, the world’s largest cryptocurrency exchange, surprised the cryptosphere late Monday when it revealed that its platform would end support for trading of three stablecoins, including the world’s second-largest stablecoin, USD Coin (USDC).
Instead, on September 29, the exchange will automatically convert all investments in USDC, Pax Dollar (USDP), and TrueUSD (TUSD) into heaps of its own stablecoin, Binance USD (BUSD), which is the world’s third-largest stablecoin. The move effectively banishes those rivals from Binance’s global hub, where over $18 billion in crypto trades flow through each day.
In a statement, Binance argued the move will “enhance liquidity and capital-efficiency for users.” Even so, it has bewildered many in the community. It will also likely shake up the dynamic between the top stablecoins, at a time when USDC had been dueling to overtake the number one token, Tether (USDT), and when Binance had been vying to stave off competition from fellow exchange Coinbase.
Tether was left alone, and will still trade on Binance.
A spokesperson from Circle, the issuer of USDC, told Fast Company that “while optimizing dollar liquidity on the world’s largest exchange may carry benefits, the paradigm does raise potential market conduct questions.”
However, Circle CEO Jeremy Allaire on Tuesday tweeted a suggestion that the move might ultimately benefit USDC, as Binance customers will still be able to deposit and withdraw funds in the form of USDC, but they will not have to manually convert those funds into Tether or BUSD to participate in Binance offerings like margin trading.
Prediction: this move leads to a gradual net share shift from USDT to BUSD and USDC. https://t.co/pvITiUXo5d
— Jeremy Allaire (@jerallaire) September 5, 2022
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