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Binance will stop supporting rival stablecoin USDC

The action removes the world’s second largest stablecoin from Binance, raising questions of monopolistic behavior.
| CryptoPress

Binance, the issuer of the world’s third-largest stablecoin, said on Monday that, beginning on September 29, it would convert customers’ holdings in USD Coin (USDC), Pax Dollar (USDP), and True USD (TUSD) into its own stablecoin (BUSD) in an effort to “improve liquidity and capital-efficiency for consumers.”, a decision that has perplexed many crypto fans.

As a result of the move, the world’s largest crypto exchange said it will remove spot, future, and margin trading with USDC, USDP, and TUSD pairs. Customers who transfer these tokens to the exchange after that date will see them automatically transformed into Binance’s stablecoin. 

In contrast, clients will be still able to withdraw funds denominated in USDC, USDP, or TUSD from Binance.

The decision essentially removes the second-largest stablecoin, USDC, from one of the most prominent positions in crypto, creating a barrier for it to surpass tether (USDT) as the largest one. The 68 billion dollar market value of USDT surpasses the 52 billion dollar market value of USDC, with BUSD in third place at 19 billion dollars. USDP and TUSD are considerably less significant.

In a blog post, Binance assured customers that the change would not impact their ability to withdraw money in other currencies. Specifically, users could continue to withdraw funds in USDC, USDP, and TUSD at a 1:1 ratio to their BUSD-denominated account balance.

Issued by Circle — a $9 billion firm that counts BlackRock, Fidelity, FTX, and Accel among its backers — USDC is the second-largest stablecoin with a market cap of over $50 billion. Over $5.5 billion in daily transactions are conducted using the stablecoin.

Monopolistic conduct?

BUSD daily volume transactions soared over 56% on the announcement to over $6.5 billion, according to statistics from CoinMarketCap.

If Binance’s self-reported transaction volume is accurate, the exchange is light-years ahead of rivals. All of this is highly theoretical and does raise worries about probable monopolistic conduct. Binance’s BUSD stablecoin, issued by Paxos, has good reason to become more useful, but this would reduce trading volumes in USDC.

Circle has spoken to various media outlets and said things like “[w]hile optimizing dollar liquidity on the world’s largest exchange may carry benefits, the paradigm does raise potential market conduct questions.”

Though the evidence for antitrust action could be weakened, USDC will still be available on other large exchanges, as  the exchange will probably be carrying a sizable bag of USDC since withdrawals in USDC are still available.

Binance Trading App on mobile phone” by wuestenigel is licensed under CC BY 2.0.

© 2022 Cryptopress. For informational purposes only, not offered as advice of any kind.

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