Binance, the largest crypto exchange by volume, will start converting any existing user balances and new deposits of USD Coin (USDC), Pax Dollar (USDP) and True USD (TUSD) into the company’s own stablecoin, according to a statement published on Monday. The conversion is scheduled to begin Sept. 29.
(Bloomberg) — Binance, the largest crypto exchange by volume, will start converting any existing user balances and new deposits of USD Coin (USDC), Pax Dollar (USDP) and True USD (TUSD) into the company’s own stablecoin, according to a statement published on Monday. The conversion is scheduled to begin Sept. 29.
USDC, issued by Circle Internet Financial, is the second-ranked stablecoin after Tether’s USDT, with a market value of nearly $52 billion, according to data from CoinGecko. Binance’s stablecoin, BUSD, is a distant third at around $19.3 billion.
Read more: Circle’s USD Coin Reaps the Benefits of Tether Circulation Drop
The exchange said the move is intended “to enhance liquidity and capital-efficiency for users.” Binance will also remove and stop any trading on spot pairs that involve USDC, USDP or TUSD, the exchange said in the statement.
Binance’s move may heat up competition among the three largest stablecoins, which are digital tokens designed to maintain a peg to the US dollar. Because stablecoins are an integral part of the crypto ecosystem and are often used an intermediary for switching between cryptocurrencies and cash, bolstering BUSD may support Binance’s push to cement its status as the top marketplace for digital assets.
The decision “is quite bold and unprecedented,” said Hagen Rooke, a partner at law firm Reed Smith LLP in Singapore. “Commercially it is a smart move for Binance because its service offering will now increasingly converge around its house-own BUSD product.”
Tether Not Included
He added that users likely won’t be left “materially out of pocket” since the stablecoins involved are all intended to be pegged to the dollar. However, the conversion may ire users wishing to use their third-party stablecoins like USDC on applications which specifically support them, like for yield generation on a decentralized protocol, Rooke said.
Binance doesn’t anticipate any regulatory implications from the change, which it had agreed on with Circle and other involved third parties in advance, a spokesperson for the company said by email.
Binance didn’t say why the changes don’t involve Tether’s USDT, which currently has a circulation of around $67 billion. “The consolidation of stablecoins on one of the world’s most active exchanges foreshadows future competition among stable assets,” a representative for Tether said in an emailed comment.
Coinbase unified its order books for the US dollar and USDC in July, a move which it said would create more liquidity between trading pairs. The offering differs depending on which part of Coinbase a user is accessing, though: On Coinbase Exchange, deposits in USDC are automatically credited with US dollars, while on Coinbase’s Prime service, users can hold USDC directly.
Current Binance-offered USDC products affected include crypto loans, which will be closed and liquidated as of Sept. 23; USDC-denominated savings accounts; DeFi staking; and the USDC/USDT liquidity pool.
Read more: How Stablecoins Became a Powerful Force in Crypto
(Updates with comment from Tether in eighth paragraph.)
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