Binance to Stop Supporting Circle’s USDC, Among Other Stablecoins
- Binance to auto convert USDC, USDP, and TUSD into its own stablecoin-BUSD.
- Binance to remove Spot, Future, and Margin trading with USDC, Pax USDP, and TUSD pairs on September 29 to “enhance liquidity and capital-efficiency for its users.”
The world’s leading cryptocurrency exchange Binance has announced that it said it would remove spot, future, and margin trading with USD Coin (USDC), Pax Dollar (USDP), and True USD (TUSD) pairs on September 29 to “enhance liquidity and capital-efficiency for its users”.
Binance stated it would be converting three major stablecoins USDC, USDP, and TUSD into its own stablecoin (BUSD).
“Binance is introducing BUSD Auto-Conversion for users’ existing balances and new deposits of USDC, USDP and TUSD stablecoins at a 1:1 ratio”, the blog post reads.
The exchange has, however, pointed out that it is not a complete delisting of the above-mentioned stablecoins, and users can still manually convert their holdings in the stablecoins to BUSD but cannot convert from BUSD to the affected stablecoins.
“This will not affect users’ choice of withdrawal: Users will continue to be able to withdraw funds in USDC, USDP, and TUSD at a 1:1 ratio to their BUSD-denominated account balance,” said Binance’s blog post reads. As per the announcement, USDC products affected include saving accounts, DeFi staking subscriptions, and crypto loans, which will be closed and liquidated on September 23.
Many believe the latest move by Binance is targeted at dwindling competition in the stablecoin market. One of BUSD’s biggest rivals is the Circle-issued USDC.USDC is used in transactions worth over $5.5 billion a day and has a market cap of over $ billion.
Binance’s own stablecoin enjoys a market cap of over $19 Billion and is right behind Tether’s USDT and Circle USDC in the top stablecoin list. Tether’s USDT continues to be the most dominant stablecoin in the space, with a market cap of $67 billion, accounting for more than 80% of the trading volume in the industry.
It is striking how Binance has decided not to auto-convert Tether’s stablecoin despite it being one of its biggest competitors. It is likely that Circle USDC’s decision to block wallets that have interacted with the US-sanctioned Tornado Cash may have influenced the move.
Many in the crypto community have had mixed reactions to this latest development. While some were quick to call the move unethical, others believe the move is “actually a good feature face value.” Many have also voiced concerns about the risk of having less liquid alternative stablecoins available on the platform.